automobile industry vision - 2025 -...

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PUBLICATIONS

ISSN-2319-1058 JOURNAL OF INNOVATIONS IN ENGINEERING

AND TECHNOLOGY

AUTOMOBILE INDUSTRY VISION - 2025

B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur – Email : [email protected]

– Membership No :- F 1066850

&

– Dr. J.L. Sehgal, Chairman, IE(I), RSC, Jaipur

– Membership No : F 100519-3

ABSTRACT

Urban population is expected to increase from the present 28% to around 45%

by 2025. Rural population is also becoming progressive and there is a huge market for

automobiles in India. Automotive industry in India is one of the largest and one of the

fastest growing industries in the world. There are 22 commercial vehicle

manufacturers which are engaged in the production of automobiles in India. Indian

automobile market has become highly competitive today. Auto manufacturing

companies need to adopt value engineering methodologies and take policy initiatives

in real earnest to secure a competitive edge in the market, reduce manufacturing costs

& improve the quality of products. Value Engineering methodologies can serve as an

important tool to improve quality and reliability of products at reduced costs and

achieve the target costing objectives of the firm.

After the entry of M/s Suzuki Corporation in India, automobile manufacturing

industry has witnessed rapid growth since early 1980’s and by the late-1990's the

industry reached self reliance in engine and component manufacturing from the status

of a large scale importer of components and vehicles. Over a period of more than two

decades the Indian Automobile industry has experienced rapid growth driven by the

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entry of foreign players and indigenous manufacturers with foreign collaboration.

With comparatively higher rate of economic growth in comparison with the global

powers, India has become a hub of domestic and exports business. In the recent years,

the automobile sector has been contributing around 12% share to the GDP growth in

India.

INTRODUCTION

Indian Automobile industry is bearing the brunt of economic slowdown,

today. India has a very low penetration of car ownership ,but the scenario will change

in 5-10 years and the automobile market is expected to become worlds third largest

market by 2020. The car production is expected to increase from 2.5 million cars

today, it would double to around 5 million. The society of Indian Automobile

Manufacturers (SIAM) has scaled down the growth prospects for the industry for

2012. The important factors, that drove the automobile industry a decade ago have

changed. The Interest rates were around - 7.5% as compared to around 12%,today

Petrol prices are much higher now as compared to the world markets .In India,

customers purchase cars only, when their sentiment is positive. During the last

quarter, the economy grew at 4.9% only. In this scenario consumers have become

more conservative. Lower end SUV in the Multi - Utility vehicle segment is selling

due to reasons of people movement .The remaining industry growth is almost flat,but

the market is still on the positive size. Industry plans for three to four years period.

Automobile Companies, normally plans for their investments on a long term basis.

Although, lower sales are upsetting the industry. Yet the growth prospects are

expected to improve in the long run .Companies are creating higher value products

for the customers with attractive features and financing facilities,today and are

exploring different segments and products in smaller cars and SUV’s. Most of these

products sales are growing on the back of diesel offerings.




fastest growing industries in the world. There are 22 commercial vehicle

manufacturers which are engaged in the production of automobiles in India. Indian

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automobile market has become highly competitive today. Auto manufacturing

companies need to adopt value engineering methodologies and take policy initiatives

in real earnest to secure a competitive edge in the market, reduce manufacturing costs

& improve the quality of products. Value Engineering methodologies can serve as an

important tool to improve quality and reliability of products at reduced costs and

achieve the target costing objectives of the firm.

Population in all big cities is increasing year on year . Delhi population stands

today at more than 18 million . The number of vehicles plying on Delhi roads is

increasing continuously . Majority of street roads are lined up with vehicles parked on

both sides of the road, with the result that movement of vehicles is restricted even on

wide roads. The majority of population does not own cars or any motorized vehicle .

Pedestrians will find it increasingly difficult to survive on the road. National

automobile policy should address the problems of vehicle parking spaces and rights of

pedestrians across the country.

India’s passenger car and commercial vehicle manufacturing industry is the

seventh largest in the world. India has become a manufacturing hub for Auto mobile

industry . Industry needs to train more Automobile engineering graduates , PG’s and

Doctorates to promote R&D activities , future growth and production of innovative

world class, fuel efficient products for the vision 2025.Appropriate strategy,

manpower planning , skill development and employability of Indian engineers and

technicians must be improved to match the future requirements of manpower.

BACKGROUND

In the 21st Century, we will be dealing with new concepts like “self branding”

an insight into the new manufacturing environment and social networking and lean

manufacturing for survival in 2025 Rapid economic expansion is fuelling the

demand for skilled manpower in the face of low levels of workers employability.

NSDC, and state & central Government initiatives hold crucial importance in the

development of skilled manpower. Capacity building initiatives in the Manufacturing

Industry for the vision 2025 must be started today. Every project throws some

challenges, but a challenge always leads to opportunities ,which should be used

pragmatically.

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Managing Director and Chief Executive Officer of National Skill

Development Corporation (NSDC) Shri Dilip Chenoy stated on 09 Nov 2012, that

the corporation is scaling up its network to include a large number of manufacturing

companies for imparting training in skill development and achievement of the target

of 150 million workers by 2022. State governments and other central Govt.

Ministries are responsible for skill training of 350 million workers by 2022. If

necessary NSDC will intervene to provide proper carrier avenues for the workers . It

is essential that industry employs only those candidates , who are certified by the

Sector Skills Councils(SSC). NSDC hopes to trained 2.57 lakh workers during 2012

.Rajasthan State Skill and Livelihood Development Corporation (RSLDC) has set a

target of training 1 million youths over the next three years. If all the currents

projects stay in place, 7.40 Cores skilled youths will be trained at a project cost of Rs

1.68 cores. NSDC is providing funds for skill development initiatives at 6 % interest

only with ten year repayment cycle. RSLDC has trannied more than 85000 youths

with 300 training partners in 34 sector and 192 courses .CII is also taking action to

align skilling initiatives with the industry to improve employability of the candidates.

In rajasthan , CII has adopted ITI’s through PPP with the collaboration of SSC’s and

Skills Gurukuls. China has successfully managed to increase its labor productivity

during the past few years with proper focus on skill development .

September 2012 experienced the steepest fall in vehicle sales growth at 9.43%

during the last four years. The festive session has failed to boost customer sentiment

of car and two-wheeler buyers. Domestic car sales in September, 2012 declined by

5.36%, while the motorcycle sales declined by 18.85%. Total sales of vehicles across

all categories registered a dip of 9.45% to 14.18 lakh units in September, 2012 against

15-65 lakh units in September, 2011. In December, 2008 vehicle sales had declined

by 18.25% , whereas the sharpest decrease in two wheelers sales figures was 23% in

December, 2008.

India is a mature auto market . Lot of factors affect sales volumes and market

development . During economic down slide, there is huge pressure on the company

profit margins. Commercial vehicle (CV) sales are projected to double in 5 years and

rise from 0.8to 1.6 million units in 2017. TATA Motors Ltd (TML) and Ashok

Leyland are major producers of commercial vehicles. The German Auto giant

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Mercedes Benz is set to introduce three heavy duty global standard trucks with the

caption Bharat Benz under its 100% owned subsidiary Daimler India commercial

vehicles pvt. Ltd (DICV) . Indian commercial vehicles segment will become highly

competitive in the coming decades 2012-22. Competition among the truck

manufactures will ultimately benefit the customers and fleet owners. Bharat Benz

plans to launch 17 product in the range of 7 to 49 Ton trucks. DICV, Chennai plant

has been setup with an investment of 40,000 Crores , employing 2000 personnel with

a capacity to produce 36000 units per annum with 85-90% local content. The

company will also provide financing facilities to the customers through banks. Bharat

Benz trucks are expected to change the market dynamics by the end of 2013.

Indigenous CV manufacturers are also getting ready to meet the competition .Bharat

Benz is planning to provide strong after sales services through 28 dealers at 103

locations in India.

Recent years have witnessed major automobile manufacturers incurring huge

expenditure to recall vehicles for repairs and /or replacements of defective

components /parts. Recall of 7.4 million vehicles worldwide on 10th October, 2012 by

the Japanese biggest automaker Toyota Motor Corporation has dented the reputation

of the corporation, besides causing its economic loss. However, the process of

repairing the driver side power window switches would involve only putting heat-

resistant grease on the switches or exchanging them to mitigate the cause of fire.

Either due to intense international competition or the desire to quickly realize the

R&D expenditure incurred by the company over a number of years to develop a new

vehicle or a refresh version of an old vehicle , manufacturers are launching their new

products without due care and after full life cycle – span trials / testing of the

assemblies /components /parts fitted on the vehicle. It has been reported in September,

2012 that the Italian sports car maker Lamborghini is recalling 1500 Gallardo Coupe

and Spider auto models from years 2004 to 2006, because the power steering fluid

could leak and catch fire. Lamborghini documents sent to US safety regulators state

that pipes can corrode near the power steering pump. In rare cases, fluid can leak onto

the hot engine and cause a fire. As a result , the brand image of important

manufacturers like Toyota (Japan),Lamborghini (Italy), and NANO (India) etc. is

getting dented and customers confidence is being shaken .Indian Customers psyche is

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extremely sensitive and the customers do not venture again to try or buy any other

improved model from the same company.

ECONOMIC SLOWDOWN

Global economy is passing through critical times today. This time the

economic slow down is widespread and has affected the advanced economies &

developing countries including China, India and other countries across the globe. All

countries are likely to post lower growth rates during 2012,than that what was forecast

earlier. Austerity measures being adopted by the developed economies are leading to

social unrest and unemployment. Consumer sentiment continues to be down and the

Auto industry growth in 2013 is likely to remain slow. Rising inflation rates, interest

rates and fuel prices are adversely impacting the auto industry. Even the biggest

automakers across the globe are experiencing series of setbacks in the current times.

Auto industry economy is experiencing a slowdown shock, since January, 2012.

Passenger car industry as a whole has witnessed a drop of 15% in recent months, but

India has a mature and developing auto industry market. Every stake holder in the

auto industry is banking on improvement in the buyer segment by the end of 2012.

Despite the slowdown in auto industry there is a continuous increase in

demand of automobiles from global customers. Meeting the customer demand is of

high importance and reduction of lead time plays a vital role for continuing and

improving the business. The long lead times and high work in process inventory are

eating into the vitals of the industry and are reducing the profit margins. We are living

in an increasingly globalised world, where growth is slowing down in large markets

including US, UK and Europe. Uncertainty has increased in this challenging

environment, which has affected the customer’s confidence. Companies should

change their focus from growth to increasing efficiency, maintaining stability,

employment and risk prevention. Index of Industrial Production (IIP) has reduced

between 0.7 – 2.4% during the period ending September 2012. Therefore,

manufacturing companies should start focusing on increasing efficiency instead of

growth in the slow growth market.

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LATEST DEVELOPMENTS

Increasing global competition and complexity in the automotive sector has led

companies to find ways to maximize value of their products, processes, projects, or

services within a total system. Value Engineering has evolved into a strategic and an

innovative tool that has the potential to search alternative materials, technologies and

processes through evaluation of creative ideas. The maximized value is approached

from a customer viewpoint and the related function is expected to operate at the least

cost without affecting its quality and reliability. The literature on Value Engineering

covers all the issues involved, but it is essential to consider all the related aspects too,

that focus on maximizing values from the customers’ point of view in a

comprehensive manner.

Both indigenous and foreign auto manufacturers are producing automobiles to

meet the domestic and export markets across the globe.

Raises in inflation rate and prices of petrol/diesel are continuously creating a negative

sentiment among the customers . However, economic recovery in Europe and U.S is

likely to help India and other countries. Foreign brand auto manufacturers have

established their subsidiaries and manufacturing plants in India to cater both domestic

and export markets .Export strategies of foreign companies provide an important

hedge for the company.

A lot of future vehicle launches will be in the small car segment and diesel

versions of popular models. 70% of all cars sold in India are being financed by the

banks. Maximum number of cars sold today are in the small car segment and this mix

is not likely to change in the coming decades. Indian Govt. policies should remain

stable and transparent, so that Auto manufacturers are able to plan their long term

production levels. Keeping in view the above uncertain conditions, major German

Auto gaiant VOLKS WAGON Co has postponed its expansion plans till 2015.The

president and MD of Ford Motor Co.(India Branch) ,believes that transparent and

stable Govt. polices and positive consumer sentiment will go a long way in boosting

the auto industry market .If the Govt. suddenly decides to increase taxes on diesel

fuel ,it would create major problems for auto manufacturers through confusing

signals.

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TATA MOTORS LTD.

Tata Motors Ltd. Karl Slym new MD and Shri Ranjit Yadav President

Passenger Vehicle Business (PVB) have taken over their duties in October, 2012 and

they are planning to put the passenger vehicle business on fast track. They have made

plans to introduce dynamic product planning in TML to boost the Nano sales. In

recent months, TML had lost its market share to Mahindra & Mahindra Motors. ACE

model of TML, which was introduced in India, a few years ago is having good sales

volume in the market. Jaguar Land Rover sales are also on the rise. But, both Nano

and Indica are facing challenges, today. Nano was introduced three years ago, but it

has not achieved volume sales, as yet. Brand image of Nano car had been impacted

adversely, since its launch in 2009, due to various incidents of fire and other unsafe

incidents. Customers do not want to be associated now with a cheap or unsafe car and

have moved on to buy the premium hatchbacks. There was no reason to fail for the

Nano, as a low-cost People’s car. Nano is being branded today as the Rs. One lakh

car. Sanand plant was designed to manufacture around 30,000 Nano vehicles per

month in three shifts , but at present Nano sales are not averaging even 10,000 units

per month. Valuable time was lost in re-locating the manufacturing facility from

Singur (W.B) to Sanand (Gujrat), which had affected the marketing plan, in which

real customers for the Nano were expected to come from smaller cities and towns.

Auto industry experts believe that, if TML had not faced problems at the West Bengal

Singur facility it might have just clicked, since a loyal base of customers was waiting

to buy the Nano. There is no doubt that TML has a huge advantage in its cost-

competitive manufacturing base, which can be leveraged to quickly roll out new

models of cars . This is the main reason, why FIAT Co. is not changing its alliance

with TML. Mr. Karl slym new MD, should focus on introducing new products

sandwiched between the price tags of Nano and Indica by employing Fiat’s 1.3 lt.

multijet diesel engine which is ideally suited to achieve high volume sales.

A contemporary shaped Nano fitted with a diesel engine keeping in tune with

the market trends is likely to achieve volume sales in India. By using their experience

in brand image building and marketing, Mr. Karl Slym and Mr. Ranjit Yadav can

reposition the Nano as a smart car and project its lower price as an important factor in

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its favor. Sales are gradually increasing and satisfied customers experiences over the

years will further enhance the Nano sales.

On a standalone basis, TML is impacted by weak macro-economic outlook

and sluggish industrial demand coupled with diesel price increases. These factors are

affecting medium CV’s and heavy CV’s. The CV market share is 69.7% and

passenger car sales share is 12.3% today. Karl Slym MD of TML opines, that new

cars & features generate sales in India. Therefore, TML plans to maintain a mix of

refresh & new vehicles in CV’s and passenger cars to introduce six cars and 25 CV’s

and products in volume growth segments like utility vehicles. TML has been losing

market share in passenger cars in the last few years and sales volumes are lower than

expected. The commercial vehicles share has reached 59.7% and passenger cars

market share is at 12.3% today. Medium commercial vehicles and heavy commercial

vehicles sales have been reduced.

MAHINDRA AND MAHINDRA

In recent months, Mahindra and Mahindra group has been growing its auto

manufacturing segment and has entered all segments of the automobile industry with

its overseas forays and acquisitions. Farm equipment sector sales were low in Q2 and

is struggling to survive today. Operating margins were lower at 11.4% (12%). The

company performance was boosted with higher sales in vehicles and SUVs by 32%.

M & M has launched its first premium SUV in October 2012. M&M has recently

acquired the South Korean Co.Ssang Motor Co, which is expected to break even in

two years. REXTON manufacture at the plant , RX5,a high end – SUV was launched

on 20 Nov.2012.

FORD MOTOR COMPANY

Ford company had commenced its operations as a marginal player in India, in

1995. It became a serious player with the launch of FIGO model in March, 2010. Ford

company has witnessed slow growth, stiff competition and rapid shift of the market to

diesel vehicles. The company believes models based on global proven platforms and

hatch backs can achieve higher sales volumes and that its strategy is on the right track,

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despite a slowing economy, where rising inflation rates are continuously creating

worry in the minds of customers.

Ford company is planning to make a mark in the small car segment with high

levels of localization in addition to maintain its domestic and export strategy for

vehicles. Small car is expected to meet the demand of customers who are graduating

from two wheeled vehicle users to four wheeled vehicle owners due to their enhanced

purchasing power

It has established its manufacturing plants in Chennai and Gujrat with a

capacity to manufacture 4.4 lakh vehicles and 7.1 lakh engines p.a. for export and

sales in India. In order to beat its competitors, around 70% local content will be

introduced in the low-cost ECO-Sport SUV car to make it competitive & obtain

economy of scale through exports and sales in India. Ford company has failed to

attract customers for the sale of its global Fiesta Sedan launched in July 2011.

Currently, Ford has adopted a multi-pronged strategy for the years 2012-2014 to

introduce new compact models and achieve high volumes in India.

VOLKSWAGON INDIA (VW)

German automobile major passenger car group is planning to introduce a

specially design small car to fill the gap in its portfolio. Managing director of VW

feels that a low-cost entry level car would be very difficult to support with our brand

expectation of safe, sturdy and good to drive vehicles. Small cars would continue to

remain a dominant part of the Indian market. SUV’s and MUV’s segment is

experiencing much higher rates of growth, which are expected to become dominant

products in the market. Volks Wagon ,Touareg SUV is targeting hardcore enthusiasts

at high prices and its sales volume is low.

Volkswagon India has introduced Vento and Polo variant cars in India and has

a market share of just less than 3%. The company sold 6091 vehicles in August, 2011,

but the sales have dropped to 4410 vehicles in August, 2012. Passenger car industry

as a whole has witnessed a drop of 15% in recent months. Volkswagon company

opines that India is a mature and developing car market. The company has planned its

growth as a customer driven organization. A large number of factors affect the sales.

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It is necesary to keep a continuous watch over the car market. If the car market

continues a declining trend, the industry will experience severe margin pressures. VW

is working hard to gain more than 3% market share and increase its number of

dealers to 150 in 2012.

MERCEDEZ BENZ

The Mercedes Benz had started its luxury car sales, in completely knock down

(CKD) condition in India. Luxury car sales had been zooming at 50% CAGR from

2007 till 2011. Slow down has started since Jan 2012 and in the first 8 months of

2012, luxury car sales have been flat with a modest 8% growth. The company has

sold 250 B-class imported vehicles in 2012, but the market remains unpredictable.

Audi and BMW mini SUV’s sales have increased affecting adversely the company car

sales. It has now introduced B class segment cars in CKD to beat the competitors.

Mercedes-Benz rolled out its first locally manufactured M-class luxury SUV costing

Rs. 45.64 lakhs from its Chaka plant near Pune in October, 2012. In the premium

hatchback segment there are both diesel and petrol variants. The SUV segment is

dominated by diesel vehicles and no petrol SUV is selling fast. Currently diesel

vehicles are available in hatch back and the low and segment sedan cars.

GENERAL MOTORS

US car major General Motors(GM) company has acquaired 43% share from

its equal joint partner Shanghai Automotive Industry Carporation (SAIC) group in

October, 2012. This decision reflects its confidence in the long term potential of

Indian auto industry. GM plans to indtrouce hatchback SAIL and its Sedan Version,

MPV Enjoy by end of 2012.

MARUTI SUZUKI







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India.

M/s Maruti Suzuki has introduced new Alto-800 in petrol and CNG versions

in October, 2012. Alto car was first introduced in September, 2000 and more than 2

million units have been sold till date. It is the largest selling car in past 8 years. New

version Alto has 15% higher fuel efficiency giving 22.4 kpl. It is fitted with a higher

compression ration and volumetric efficiency engine. At the selling price of Rs. 2.44

lakh, this low priced car is loaded with high value features.

FORCE MOTORS

Force Motors, Pithampur (M.P.) has introduced “Traveller 26” LCV in

October, 2012. The bus is powered by a 129Ps/295 Nm common rail engine made

under licence from Daimler AG. It uses dual mass fly wheel technology and has

ventilated disc brakes on all wheels. Force Motors is planning to introduce three more

variants in MPV and SUVs in 2013.

HONDA

Honda company has decided to make its diesel debut with the Rs. 7 lakh

“Amaze” sedan in 2013 and a variant of its popular and best seller “City” model. In

the next few years the company will launch diesel variants of its small cars with

smaller engines to cut costs. A new MUV will be introduced in 2014, while a compact

SUV is expected to be launched in 2015. The company’s diesel variants will be fitted

with a new all-aluminum 1500cc engine which will be manufactured in India and

strapped across various models including a 7-seater MUV and an all-new compact

SUV.

Being a late entrant into the fast growing diesel market, Honda has lined up an

aggressive plan to spread its wings fast into the segment. Lack of diesel variants has

already resulted in los of crustal market share. Amaze model will compete with

segment heavy weights like Maruti Suzuki’s Desire and Tata Motor’s Indigo CS. The

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company has decided to make the diesel engines and transmission in India to control

the costs.

NISSAN COMPANY

Japanese Auto Major Nissan Company has established a manufacturing plant

at orgadam near Chennai . It had sold 33,000 vehicles in 2011 and has planned to sell

66,000 vehicles in 2012 , besides maintaining its export volumes at 100,000 vehicles

per annum. The company has already launched six models (including 3 models

manufactured in India). The company has launched a 7 seater vehicle Evalia in 2012

and it has planned to launch 10 new models including Datsun in 2016.

TVS MOTORS

TVS motors has recorded drop in sales during the second quarter July-

September, 2012. Between April-Septermber, 2012, industry growth had declined to

2%, when compared to 19% in the same period of 2011.

BAJAJ AUTO

The two wheeler major Bajaj Auto sales from April-September 2012 has

experienced a down slide of 4%. Its exports have also declined by 4% during the same

period. Bajaj Auto has 27% share in the two wheeler domestic market and 33%

market share including exports. The company has adopted a strategy to focus on high

end motorcycle segment with its variable cost structure. Customers are value

conscious. Mileage is important, but customers want to have more features. Better

technology offers an opportunity to add features in different segments of vehicles.

FUTURISTIC VEHICLES

Tata Motors is in the forefront of new technology applications. TML has

developed the worlds first air powered car (Zero emission). Tata motors Ltd has

scheduled the Air Car to be launched by the end of 2012.The air car developed by ex-

Formula One engineer Guy N, for Luxembourg-based MDI, uses compressed air to

develop the necessary engine power for running the car. This car is called ‘MiniCAT’

and is expected to cost Rs. 365,757 or $8,177. The ‘MiniCAT’ is simple, light ,urban

car which has a tubular chassis and its body is made of fiberglass, which is glued and

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not welded. A Microprocessor is used to control all electrical functions of the car. One

tiny radio transmitter sends instructions to the lights, turn signals and every other

electrical device on the car. The temperature of the clean air exhaust is between 0 C to

15C below zero, which makes it suitable for use by the internal air conditioning

system without using gases or any other power sources. There are no keys, just an

access card which can be read by the car from the owners pocket .It costs less than Rs

50 per 100Km, that’s about a tenth of the cost of a car running on gas. Its mileage is

about double that of the most advanced electric car, which is useful for city motorists.

The car has a top speed of 105Km per hour and would have a range of around 300Km

between refuels. Refilling of the car can be done at adapted gas stations with special

air compressor .A fill up will only take two to three minutes and costs approximately

Rs 100 .This car can also be filled at home with its onboard compressor. It will take 3-

4 hours to refill the tank, during sleep hours , because there is no combustion engine.

Oil changing requires 1 liter of vegetable oil every 50,000 Km and due to its

simplicity very little maintenance is required

Tata technologies have unveiled a cheap Electric Car eMO (Tata’s Business

Card) at the Detroit show in January 2012 which is priced at $ 20,000. Mr. Kewin

Fisher heads the groups vehicle development team. It weighs 900 kg and according to

Warren Harris, President, Tata Technologies, this vehicle employs intimate

understanding of frugal engineering principles. The vehicle has a steel frame which

meets the existing crash standards and has a seating capacity for four adults.

Tata Motors Ltd. CNG variant of the Nano is going to hit the roads much

before the diesel variant. The diesel variant is expected a year ahead from now. The

CNG model was displayed at the Indian Auto Show 2012, which has a dual fuel

option of CNG and petrol. At a time, when fuel conservation is becoming imperative

across the world, Tata Motors is aiming to make a car, Tata Megapixel that can

deliver up to 100 kilometers from a litre of fuel by using a unique combination of

technology. The Tata group has announced in July 2012 the development of a four-

seater concept vehicle which is a global range extended electric vehicle (REEV)

meant for city driving. This new innovation from the Tata group is expected to be

commercially launched in around three years from now.

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DIESELISATION

Manufacturers are producing more diesel vehicles today, due to the growing

customer demand, price differential in petrol & diesel prices and the fact that a diesel

vehicle is 20 to 40% more fuel efficient. Currently refineries are getting Rs. 12.50

lesser recovery per liter of diesel. Government has regulated the prices of petrol, but

diesel price is still being regulated. Internationally diesel car are using clean diesel or

low-sulphur fuel, which is emitting lesser pollutants. European consumers are using

super refined diesel. Diesel car in Europe must conform to Euro-V emission

standards. In France 77% of automobiles are operating in diesel fuel, while Spain has

69% , western Europe has 53%, India has 49%, Germany has 44% and Japan has only

2% diesel vehicles.

Car manufacturers in India are capable of introducing more efficient engines,

but Government has to decide a road map and implement the policy of enforcing

tougher emission standards like BSIV-IV/V. Lax enforcement of vehicle fitment

certificate is a major contributor to vehicular pollution. India needs to modernize

commercial vehicles on priority and weed out more than 20 years old vehicles,

Which are using outdated technology.

A recent Central Pollution Control Board study conducted in Delhi has

concluded that vehicles are contributing only 6.6% to particulate matter (PM)

emissions. Road dust created by the construction activity is the biggest contributor of

PM at 52.5% . Industries around Delhi and neighboring states account for as much as

22% of PM, while 19% is due to its geographical location . According to the

information provided in the parliament on 23rd August 2012 sector wise diesel

consumption data shows that generation sets are consuming 5%, Mobile towers 2% ,

Commercial vehicles 16% and other 77% of total diesel consumption . All related

factors must be tackled together to provide safe quality air to Delhi citizens or

elsewhere in India. Since the year 2000, the levels of two key pollutants , namely PM

10and nitrogen oxides have risen sharply by 47% and 57% respectively beyond the

human consumption safety limits, which are posing a serious threat to Delhi

population .

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There is a spurt in the introduction of diesel cars, UV’s and CV’s today. GM,

Honda and other companies have decided to introduce diesel variants of their best

seller vehicle models to meet the market competition. Honda company sales fell by

4% in 2010-2011 and by 8% in 2011-12. Being a late entrant in to the fast growing

diesel market, companies have lined up an aggressive plan to launch vehicles in the

diesel segment. Honda is introducing two new cars in 2013 with entry level Sedan

‘AMAZE” and a diesel variant of its best seller city model.A new all aluminum 150cc

engine is being manufactured in India to be strapped across various models including

a 7- seater MUVin 2014 and new compact SUV in 2015. To keep the prices low

,Honda has decided to keep the length of the car under 4 meters. Honda is decided to

make the diesel engine and transmission at TAPUCARA plant in India to control

cost. New models will also be rolled out later from this plant .Honda is also planning

to manufacture a smaller diesel engine in India for small cars.

EXPORTS

The domestic players as well as the foreign companies are exporting their

products today. Indian automobile manufacturers including Tata Motors, Maruti and

Mahindra and Mahindra are the major exporting companies to Europe, Middle East,

Africa and Asian markets. After having firmly established themselves in the domestic

market the automobile sector is now penetrating the international arena and vehicle

exports are at their highest levels. Top Ten Players in Indian Automobile Sector

include Maruti Suzuki India, Hero Motors Limited, Tata Group, Bajaj Auto Limited,

Mahindra Group, Ashok Leyland, Yamaha Motor India, Hyundai Motors India

Limited, Toyota Kirloskar Motor Private Limited and Honda Siel Cars India Limited.

CONCLUSION

The potential market for low-cost cars is enormous throughout the developing

world. In the current slow growth environment, inventory is piling up in all auto

manufacturing companies. Auto manufacturers, therefore need to address the

problems of customer demands and market preferences more effectively employing

value engineering methodologies to introduce new fuel efficient vehicles, value added

and improved aesthetics models to garner higher market share in the world market.

252

Automobile industry including auto-components manufacturing industry is

expected to witness higher rates of growth in the coming decades. From a low-key

supplier of auto components in the domestic market, the industry has emerged as a

significant player in the global automotive supply chain. Preparations for building

manufacturing capacities and capabilities for futuristic vehicles and components

industry must be started in real earnest today.

REFERENCES

www.google.com

www.tatamotors.com

[email protected]

Cerasale, M. & Stone, M. 2004. Transforming how companies serve customer. IEE

Engineering Management: 42-43.

Cheah, C. Y. J. & Ting, S. K. 2005. Appraisal of value engineering in construction in

Southeast Asia. International Journal of Project Management, 23: 151-158.

Christian, A. & Bjornenak, T. 2005. Bundling and diffusion of management

accounting innovations: The case of the balanced scorecard in Sweeden. Management

Accounting Research, 16(1): 1-20.

Cooper, R. B. & Zmud, R. W. 1990. Information technology implementation

research: a technological diffusion approach. Management Science, 36: 123-139.

Creswell, J. W. 2003. Research design. Qualitative, quantitative and mixed methods

approaches. (2 ed.). Thousang Oaks: Sage Publications.

Davies, K. E. L. 2004. Finding value in value engineering. Cost Engineering, 46(12):

24-27.

Dawson, B. 2000. Evolving value management- Where to next? Paper presented at

the HKIVM International Conference, Hong Kong.

Dell'Isola, A. J. 1988. Value engineering in the construction industry. Washington D.

C.: Smith Hinchman & Grylls.

253

ISSN-0974-2093 MERI - JOURNAL OF MANAGEMENT AND

INFORMATION TECHNOLOGY

GROWTH OF INDIAN AUTOMOBILE INDUSTRY

B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur – Email : [email protected]

– Membership No :- F 1066850 MC

&

– Dr. J.L. Sehgal, Chairman, IE(I), RSC, Jaipur

– Membership No :- F 100519-3 AS

ABSTRACT

The demand of automobiles is increasing continuously across the globe. The

auto industry basic parameters are strong and despite the recent increase in diesel

prices, dieselization of vehicles will certainly continue in the short term. We are

witnessing, today new launches of improved versions of vehicles with attractive

features .Manufacturers are offering the customers, heavy discounts attractive

financing options and bank loans at lower interest rates to boost their sales. Success of

a company depends on making the customers happy and everything else is incidental.

Global economy is passing through critical times today. This time the economic slow

down is widespread and has affected the advanced economies & developing countries

including China, India and other countries across the globe. All countries are likely to

post lower growth rates during 2012,than that what was forecast earlier.

The present industry hiccups are temporary due to economic slowdown across

the globe and the industry manger must keep focusing on medium and long term

goals. Automobile penetration in the population is less than 3% in India and the

demand is likely to double in the next 5 years Increasing global competition and

complexity in the automotive sector has led companies to find ways to maximize

value of their products, processes, projects, or services within a total system. Value

Engineering has evolved into a strategic and an innovative tool, that has the potential

254

to search alternative materials, technologies and processes through evaluation of

creative ideas. The maximized value is approached from a customer viewpoint and

the related function is expected to operate at the least cost without affecting its quality

and reliability. The literature on Value Engineering covers all the issues involved, but

it is essential to consider all the related aspects too, that focus on maximizing values

from the customers’ point of view in a comprehensive manner.

INTRODUCTION

Indian Automobile industry is bearing the brunt of economic slowdown,

today. India has a very low penetration of car ownership ,but the scenario will change

in 5-10 years and the automobile market is expected to become worlds third largest

market by 2020. The car production is expected to increase from 2.5 million cars

today. It would double to around 5 million in the next decade. The society of Indian

Automobile Manufacturers (SIAM) has scaled down the growth prospects for the

industry for 2012. The important factors, that drove the automobile industry a decade

ago have changed. The Interest rates were around 7.5% as compared to around 12%

today. Petrol prices are much higher now as compared to the world markets .In India,

customers purchase cars only, when their sentiment is positive. During the last

quarter, the economy grew at 4.9% only. In this scenario consumers have become

more conservative. Lower end SUV in the Multi - Utility vehicle segment is selling

due to reasons of people movement .The remaining industry growth is almost flat,but

the market is still on the positive side. Automobile Companies, normally plan their

investments on a long term basis, but they plan their production schedule for a three to

four year period only. Although, lower sales are upsetting the industry, yet the

growth prospects are expected to improve in the long run .Companies are creating

higher value products for the customers with attractive features and financing

facilities, today. They are exploring different segments and products in smaller cars

and SUV’s however most of these products sales are growing on the back of diesel

offerings.

Global economy is passing through critical times today. This time the

economic slow down is widespread and has affected the advanced economies &

developing countries alike, including China, India and other countries across the

255

globe. September 2012 experienced the steepest fall in vehicle sales growth at 9.43%

during the last four years . The festive season has failed to boost customer sentiment

of car and two wheeler buyers. Domestic car sales in September 2012 declined by

5.36%, while the motorcycle sales declined by 18.85%. Total sales of vehicles across

all categories registered a dip of 9.43% to 14.18lakh units sold in Sep 2012 as against

15.65 lakh units sold in Sep 2011. In December 2008 vehicle sales had declined by

18.25% .The sharpest decrease in two wheeler sales figures was 23% in December

2008. All countries are likely to post lower growth rates during 2012,than that what

was forecast earlier. Austerity measures being adopted by the developed economies

are leading to social unrest and unemployment. Consumer sentiment continues to be

down and the Auto industry growth in 2013 is likely to remain slow. Rising inflation

rates, interest rates and fuel prices are adversely impacting the auto industry. Even the

biggest automakers across the globe are experiencing series of setbacks in the current

times. Auto industry economy is experiencing a slowdown shock, since January,

2012. Passenger car industry as a whole has witnessed a drop of 15% in recent

months, but India has a mature and developing auto industry market. Every stake

holder in the auto industry is banking on improvement in the buyer segment by the

end of 2013. Auto manufacturing companies need to adopt value engineering

methodologies and take policy initiatives in real earnest to secure a competitive edge

in the market, reduce manufacturing costs & improve the quality of products. Value

Engineering methodologies can serve as an important tool to improve quality and

reliability of products at reduced costs and achieve the target costing objectives of the

firm. Value Stream Mapping (VSM) is a powerful visual, simple and easy to

implement tool for lean manufacturing which allows the firms to understand and

improve continuously various types of wastes (mudas) in the manufacturing process

to improve bottom lines and satisfy customers in modern competitive market

environment.

BACKGROUND

The demand of automobiles is increasing continuously across the globe. The

auto industry basic parameters are strong and despite the recent increase in diesel

prices, dieselization of vehicles will certainly continue in the short term. We are

witnessing today, new launches of improved versions of vehicles with attractive

256

features .Manufacturers are offering the customers, heavy discounts attractive

financing options and bank loans at lower interest rates to boost their sales. Success of

a company depends on making the customers happy and everything else is incidental.

Management must make concerted efforts to understand the needs of customers to

provide service and after sale service to succeed in the market.

Meeting the customer demand is of high importance and reduction of lead

time plays a vital role for continuing and improving the business. The long lead times

and high work in process inventory are eating into the vitals and are reducing the

profit margins. Increasing global competition and complexity in the automotive sector

has led companies to find ways to maximize value of their products, processes,

projects, or services within a total system. Value Engineering has evolved into a

strategic and an innovative tool that has the potential to search alternative materials,

technologies and processes through evaluation of creative ideas. The maximized value

is approached from a customer viewpoint and the related function is expected to

operate at the least cost without affecting its quality and reliability. The literature on

Value Engineering covers all the issues involved, but it is essential to consider all the

related aspects too, that focus on maximizing values from the customers’ point of

view in a comprehensive manner.




fastest growing industries in the world. India manufactures over 11 million vehicles

(including 2 wheeled and 4 wheeled) and exports about 1.5 million annually. India’s

passenger car and commercial vehicle manufacturing industry is the seventh largest in

the world. There are 22 commercial vehicle manufacturers which are engaged in the

production of automobiles in India. Indian automobile market has become highly

competitive today.

The overall production volume in the automotive segment is estimated to grow

at a capital CAGR of 10.3 % over the next five years FY -2011-15 as shown in the

graph.

257

Fig..2 : Auto Component Industry Sales (Source: ACMA

The Key growth drivers of auto industry are the growing population with

increased income and spending levels and attractive financing options. Government

policies and initiatives are also acting as positive factors. Owing to the availability of

skilled human resources and talent pool, low-cost sourcing capabilities and increased

domestic demand, India has become a manufacturing hub for the establishment of

both technology and manufacturing platforms of auto manufacturing and auto

components industry. The restraints for the auto industry growth, include increasing

fuel prices, freight charges, infrastructure bottlenecks, fluctuating rates of interest,

emission norms/levels, aging norms and loading limits for the commercial vehicle

segment. Industry needs to offer the consumers, innovative value-added products in

future to boost its growth prospects. Continuous growth of automotive industry has

also provided a strong impetus to the forging industry, since the newer generation of

cars require better quality forgings. M/s Amtek, Bharat Forge and Sundaram

Fasteners are providing necessary support to the auto industry

NATIONAL MANUFACTURING POLICY 2012

The manufacturing sector has emerged as a science based knowledge intensive

high technology area with serious implications for technical change, competitiveness,

growth in employment, trade patterns, location of manufacturing activities and global

258

division of labor. Moreover, new climate-responsive technology development is an

essential part of attempts to resolve the pressing environmental problems haunting the

human civilization to realize the goals of transformational growth. The crucial factor

for realizing the rising expectations and aspirations for future auto industry growth in

India, is the effective use of modern science, state of art manufacturing machinery &

technology, automation , robots and infrastructure development.

The national manufacturing policy is likely to be unveiled by early 2013. The

draft policy promises to create 100 million new jobs and increase the share of

manufacturing from its present level of 15-16% to 25% in the country’s GDP by

2025. Some states, like Rajasthan, Maharasthra and Gujrat have already started

acquiring land for creating national manufacturing and investment zones (NMIZ) in

their states to boost the growth of manufacturing industry segment. Central

Government is seriously concerned about an impending slowdown in the

manufacturing sector and industrial production. Industry sources are worried about

high cost of credit, investment slow down, skill shortage, high input cost, hurdles in

getting environmental and other clearances and logistics support. A manufacturer

would like to have easy access to infrastructure at reasonable cost, ready to deploy

labor force and the flexibility to align the cost of personnel to the scale of operations

and provisions for managing the eco system. Special Incentives for Green

Technologies and manufacturing units in NMIZs include the following:

a) Low-interest loans for manufacturing to invest in new plans to produce

clean/green technology for investments in new plants to produce green products.

b) Creation of a central fund for supporting research in the areas of green

manufacturing

c) Provide grants for workers training that will lead to expanded energy efficiency

and renewable energy industry workforce.

d) Preference to green units/green products during procurement by State/Central

Government.

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e) If an SPV in a particular NMIZ decides to have an IPP based on renewable green

technology, an investment subsidy to cover the additional interest cost per mega

watt may be considered.

The national automobile policy 2011 is expected to be released before end of

2012. Passenger and commercial vehicle segments have become highly competitive

with the entry of international brands like Ford, GM, Fiat, Audi, Meredez Benz,

Volvo and Navistar in India. TML is likely to introduce a new line of highly

competitive, fuel-efficient vehicles to face the competitors challenge and garner a

higher market share. TML market share during 2011-12 was reduced to 58.5%. In

order to regain its earlier higher market share and develop a competitive edge in the

market, TML is starting the manufacture of cars with indigenously developed higher

powered and more fuel-efficient engines.

POLICY INITIATIVES

The Government policy initiatives are necessary to create a vibrant and

globally competitive automotive industry. The enhancement of value addition and

local capabilities in the automotive industry are necessary to achieve significant

results. Government initiatives also act as catalytic agents for the growth and

development of automotive components and parts manufacturing industry. The

automotive industry is perceived by researchers as an important sector representing

the biggest industrial sector in the world economy (Helper, 1991). Furthermore,

Berdoto (1991) and Wells & Rawlinson (1994) in Story et al. (2001) highlighted that

significant changes have taken place in the automotive industry structure.

Automotive manufacturers are always under pressure to switch over to new

technologies and processes, cut costs, shorten lead times for introduction of new

product makes and models and resort to outsourcing of components by devolving to

suppliers much of the burden of designing and manufacturing various components

and assemblies.

Global competition and complexity in the automotive sector has also led

companies to employ latest materials, technologies and processes for value addition

in their products. VE employs functional analysis to identify and eliminate

260

unnecessary cost by introducing cost effective design of products or redesign of

products, processes, projects or services.

All organizations need to reduce unnecessary cost by identifying and

eliminating waste at the earliest opportunity. Fong (1999) described VE as a creative

group problem solving technique. VE becomes a useful tool in resolving issues in

the organization by identifying the main function of design, product, project or

service. VE has evolved into an innovative tool that develops alternatives through

evaluation of creative ideas and serves as an important tool in the pursuit of obtaining

a competitive edge in the market.

ALTERNATIVE MATERIALS

In the contemporary world, the spirit to innovate on technologies has become

the central force that transforms emerging economies as their expanding market

potentials provide enormously challenging environment which breeds innovations.

From Automotive to aviation, no sector can perform without steel industry.

Steel forms 60-65 % of the total weight of the vehicle. Flat products, such as hot

rolled, cold rolled and coated steel sheets account for about 80% of steel products

consumed by the auto makers. However, the OEM’s are still importing their specific

requirements of High strength steels, Advanced high strength steels , Dual - phase

and Trip steels to meet their needs Currently, steel is being substituted by the use of

aluminum, magnesium, titanium, carbon fiber , non – metallic’s like SRP

composites, plastics, resins ,etc. Even as the automotive industry is growing at a rapid

rate , the demand for steel is gradually decreasing due to the use of newer lighter

materials to effect, value- addition , weight reduction and cost – reduction as well as

to effect improvements in fuel efficiency and emission norms . These substitute

metals also show good resistance to corrosion and impact . At present, 30-35% of the

auto components are being manufactured out of non – metallics, which would

increase soon to 40-45% .

GROWTH OF INDIAN AUTO INDUSTRY



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India.

Currently, the key players in automobile industry include Hindustan Motors,

Maruti Udyog, Fiat India Private Ltd, Tata Motors, Bajaj Motors, Hero Motors,

Ashok Leyland and Mahindra & Mahindra. A few of the foreign players include

Toyota Kirloskar Motor Ltd., Skoda India Private Ltd., Honda Siel Cars India Ltd.,

Ford Motor Company, General Motors, BMW, Audi, Nissan, Volvo, Force motors,

Porsche, Chevrolet, Hyundai, Daewoo, Reva, Toyota etc. Foreign companies have

established their plants in India to share the benefits of market growth and exports.

Many new projects are coming up in the automobile sector. Auto-Expo exhibitions

are being organized every year at Pragati Madan, New Delhi to interact and exchange

views with the foreign exhibitors and share their experiences and technological

advancements.

CURRENT SCENARIO

Commercial vehicle sales are projected to double in 5 years from 0.8 million

in 2011-12. TML and Ashok Leyland have planned to introduce new products and

establish new networks to reach out to their customers for offering a stiff competition

to the new entrant Bharat Benz trucks in the coming years. Force Motors, a

manufacturer of commercial and utility vehicles, launched “Traveller 26” LCV in

October, 2012. The bus is powered by a 129Ps/295 Nm common rail engine made

under licence from Daimler AG. It uses dual mass fly Wheel technology and has

ventilated disc brakes on all wheels. U.S. car major General Motor Company is likely

to launch its hatchback Sail sedan version and multipurpose vehicle, Enjoy by end of

2012.

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MAHINDRA & MAHINDRA

In recent months, Mahindra and Mahindra group has been growing its auto

manufacturing segment and has entered all segments of the automobile industry with

its overseas forays and acquisitions. Operating margins were lower at 11.4% (12%).

The company performance was boosted with higher sales in vehicles and SUVs by

32%. M & M launched its first premium SUV in October 2012.

MERCEDES BENZ

The Mercedes Benz had started its luxury car sales, in completely knock down

(CKD) condition in India. Its luxury car sales had been zooming at 50% CAGR from

2007 till 2011. However, slow down has started since Jan 2012 and in the first 8

months of 2012, luxury car sales were flat with a modest 8% growth. The company

has sold 250 B-class imported vehicles in 2012, but the market remains unpredictable.

Audi and BMW mini SUV’s sales have increased affecting adversely the company car

sales. It has now introduced B class segment cars in CKD to beat the competitors.

Mercedes-Benz rolled out its first locally manufactured M-class luxury SUV costing

Rs. 45.64 lakhs from its Chakan plant near Pune in October, 2012. In the premium

hatchback segment the company has diesel and petrol variants. The SUV segment is

dominated by diesel vehicles and no petrol SUV is selling fast. Currently diesel

vehicles are available in hatch back and the low and segment sedan cars.

The German Auto giant Mercedes Benz is set to introduce three heavy duty

global standard trucks with the caption Bharat Benz under its 100% owned

subsidiary, Daimler India commercial vehicles pvt. Ltd (DICV) . Indian commercial

vehicles segment will become highly competitive in the coming decade 2012-22.

Competition among the truck manufactures will ultimately benefit the customers and

fleet owners. The company plans to launch 17 products in the range of 7 to 49 Ton

trucks. DICV, Chennai plant has been setup with an investment of 40,000 crores and

employs 2000 personnel. It has a capacity to produce36000 units per annum with 85-

90% local content. The company is planning to provide financing facilities to the

customers through banks.

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TATA MOTORS LTD.

TATA Motors Ltd (TML) has been losing its market share in passenger cars in

the last few years and sales volumes achieved are lower than expected. Presently

commercial vehicles market share stands at 59.7% and passenger cars market share is

12.3%. Sales volumes of medium commercial vehicles and heavy commercial

vehicles have been impacted adversely. TML’s market share is followed by M/s

Ashok Leyland. Bharat Benz trucks are expected to capture 4-5% market share In

India. Bharat Benz is planning to provide after sales service through 28 dealers

networks in India, and is focused on a long term commitment and not on short term

goals like volumes. The company has fully geared up for a bigger role in future and it

is increasing investments in the plant for tooling, assembly line and capacity

enhancement to roll out all new generation compact car models starting from 2014

onwards.

FORD COMPANY

Ford company had commenced its operations as a marginal player in India in

1995. It became a serious player with the launch of FIGO model in March, 2010. Ford

company CEO feels that hatchbacks are having high volumes in India. It has

established its manufacturing plants in Chennai and Gujrat with a capacity to

manufacture total 4.4 lakh vehicles and 7.1 lakh engines p.a. for export and sales in

India. In order to beat its competitors, the company is planning to introduced around

70% local content in its low-cost ECO-Sport SUV car to make it competitive & obtain

economy of scale through exports and sales in India. Ford company has failed to

attract customers for the sale of its global Fiesta Sedan launched in July 2011.

Currently, Ford has adopted a multi-pronged strategy for the years 2012-2014 to

introduce new compact models and achieve high volumes in India.

NISSAN MOTORS

Japanese Auto Major Nissan Company has established a manufacturing plant

at orgadam near Chennai . It had sold 33,000 vehicles in 2011 and has planned to sell

66,000 vehicles in 2012 , besides maintaining its export volumes at 100,000 vehicles

per annum. The company has already launched six models (including 3 models

264

manufactured in India). The company has launched a 7 seater vehicle Evalia in 2012

and has planned to launch 10 new models including Datsun in 2016.

VALKSWAGON

VolksWagon India has introduced Vento and Polo variant cars in India and

has a market share of just less than 3%. The company sold 6091 vehicles in August,

2011, but the sales have dropped to 4410 vehicles in August, 2012. Passenger car

industry as a whole has witnessed a drop of 15% in recent months. Volkswagon

company opines that India is a mature and developing car market. The company has

planned its growth as a customer driven organization. A large number of factors

affect the sales. it is necesary to keep a continuous watch over the car market. If the

car market continues a declining trend, the industry will experience severe margin

pressures.

BAJAJ MOTORS

The two wheeler major Bajaj Auto sales from April-September 2012 has

experienced a down slide of 4%. Its exports have also declined by 4% during the same

period. Bajaj Auto has 27% share in the two wheeler domestic market and 33%

market share including exports. The company has adopted a strategy to focus on high

end motorcycle segment with its variable cost structure. Customers have become

value conscious today. Mileage is important, but customers want to have more

features. Better technology offers an opportunity to add features in different segments

of vehicles.

TVS MOTORS

TVS motors has also recorded a drop in sales during the second quarter July-

September, 2012. Between April-Septermber, 2012, industry growth had declined to

2%, as compared to 19% in the same period of 2011.

RECALL OF VEHICLES

A large number of auto companies are incurring huge losses in the recall of

newer products. Recall of 7.4 million vehicles worldwide on 10th October, 2012 by

the Japanese biggest automaker Toyota Motor Corporation has dented the reputation

265

of the corporation, besides causing its economic loss. However, the process of

repairing the driver side power window switches would involve only putting heat-

resistant grease on the switches or exchanging them to mitigate the cause of fire.

Honda motors has recalled its 250cc motor bike for repairs.

It has been reported in September, 2012 that the Italian sports car maker

Lamborghini is recalling 1500 Gallardo Coupe and Spider auto models from years

2004 to 2006, because the power steering fluid could leak and catch fire. Lamborghini

documents sent to US safety regulators state that pipes can corrode near the power

steering pump. In rare cases, fluid can leak onto the hot engine and cause a fire.

NEW VEHICLE LAUNCHES

Tata technologies have unveiled a cheap Electric Car eMO (Tata’s Business

Card) at the Detroit show in January 2012 which is priced at $ 20,000. Mr. Kewin

Fisher heads the groups vehicle development team. It weighs 900 kg and according to

Warren Harris, President, Tata Technologies, this vehicle employs intimate

understanding of frugal engineering principles. The vehicle has a steel frame which

meets the existing crash standards and has a seating capacity for four adults.

Tata Motors Ltd. CNG variant of the Nano is going to hit the roads much

before the diesel variant. The diesel variant is expected a year ahead from now. The

CNG model was displayed at the Indian Auto Show 2012, which has a dual fuel

option of CNG and petrol. At a time, when fuel conservation is becoming imperative

across the world, Tata Motors is aiming to make a car, Tata Megapixel that can

deliver up to 100 kilometers from a litre of fuel by using a unique combination of

technology. The Tata group has announced in July 2012 the development of a four-

seater concept vehicle which is a global range extended electric vehicle (REEV)

meant for city driving. This new innovation from the Tata group is expected to be

commercially launched in around three years from now.

The domestic players as well as the foreign companies are exporting their

products today. Indian automobile manufacturers including Tata Motors, Maruti and

Mahindra and Mahindra are the major exporting companies to Europe, Middle East,

Africa and Asian markets. After having firmly established themselves in the domestic

266

market the automobile sector is now penetrating the international arena and vehicle

exports are at their highest levels. Top Ten Players in Indian Automobile Sector

include Maruti Suzuki India, Hero Motors Limited, Tata Group, Bajaj Auto Limited,

Mahindra Group, Ashok Leyland, Yamaha Motor India, Hyundai Motors India

Limited, Toyota Kirloskar Motor Private Limited and Honda Siel Cars India Limited.

Electricity operated Vehicles

National Electric Mobility Mission Plan 2020 is expected to be released in

2012. This plan is likely to focus on laying down the broad policy guidelines for

starting a substantive level of customised mass manufacturing of low-carbon vehicles

in India. India is largely dependent on imported crude oil and is vulnerable to price

volatility in the global oil market. Government has conducted a comprehensive survey

in collaboration with Society of Indian Automobile Manufacturers (SIAM) to

ascertain the market potential for production of the requisite number of electric &

hybrid vehicles and the manufacturing capabilities of indigenous industry.

M/s Mahindra and Mahindra company is manufacturing electric four-wheeled

vehicles and M/s TVS Motor, Hero Electric and Electrotherm companies are

manufacturing electricity operated two-wheeled vehicles in India. Also, electric

bicycles are being produced by M/s Atlas, Avon and TI cycles. Indian can learn a lot

from the initiatives taken by the French government for promoting the manufacture of

low-carbon vehicles in France.

AUTO COMPONENT INDUSTRY

The Indian auto component industry is one of India's sunrise industries with

tremendous growth prospects. From a low-key supplier providing components to the

domestic market alone, the industry has emerged as one of the key auto components

centers in Asia and is today seen as a significant player in the global automotive

supply chain. India is now a supplier of a range of high-value and critical automobile

components to global auto makers such as General Motors, Toyota, Ford and

Volkswagen, amongst others. The evolution of the Euro emission norms also made

the manufacturers rethink their business plans to meet the demand for improved

products. The potential compounded annual growth rate (CAGR) of the auto

267

component industry is estimated to be around 26 per cent in the period 2010-11.

Exports from the auto component industry are estimated to be worth US$ 5 billion in

2010-11.

Important Components Manufacturing Companies include the following:-

· Sona Koyo Steering Systems, Rane Madras and Rane TRW Systems are the key

players in steering systems.

· Bharat Gears, Gajra Bevel Gears and Eicher are some of the major players in the

gears sub-segment. Two international companies, Graziano Trasmissioni and SlAP

Gears India, have set up their base in India.

· Clutch Auto, Ceekay Daikin, Amalgamations Repco and Luk Clutches are the major

players in the clutch sub-segment. Rane Brake Lining and Rico Auto are the key

players manufacturing clutch-facings.

· GKN Drive shafts (India) and Delphi cater to the drive shaft requirements of

passenger cars and Sona Koyo Steering Systems services to the commercial

vehicle segment.

· Brakes India, Kalyani Brakes and Automotive Axles are the three major brake

system suppliers in the country.

· Rane Brake Lining, Sundaram Brake Lining, Hindustan Composites and Allied

Nippon dominate the brake linings sub-segment.

· Jamna Auto and Jai Parabolic are the major manufacturers of leaf springs.

· Gabriel India, Delphi and Munjal Showa are the key manufacturers of shock

absorbers.

268

· Lumax, Autolite and Phoenix Lamps are the key players in the headlights sub-

segment.

· Premiere Instruments and Controls is the leading player in the dashboard sub-

segment.

· Jay Bharat Maruti, Omax Auto and JBM Tools are the major players in the sheet

metal parts sub-segment.

· Lucas TVS, Denso, Delco Remy Electricals and Nippon Electricals are the key

players in this segment.

· Phoenix Lamps, Autolite, Hella India and Lumaxare prominent players

manufacturing sheet metal parts.

The government had taken a number of initiatives to promote foreign direct

investment (FDI) in the industry, that include:-

· Automatic approval for foreign equity investment up to 100 per cent of

manufacture of automobiles and components is permitted

· The automobile industry is delicensed

· Import of components is freely allowed

The Ministry of Heavy Industries and Public Enterprises has prepared the

Automotive Mission Plan 2006-2016, which would promote the growth of auto sector

to achieve the following targets :-

269

· Increase turnover to US$ 122 billion – US$ 159 billion by 2016 from US$ 34

billion in 2006

· Increase export revenue to US$ 35 billion by 2016

· Provide employment to additional 25 million people by 2016

· The automotive sector would be expected to contribute 10 per cent of the

country's GDP by 2016

The auto component industry appreciated the government's announcement of

excise duty rollback being limited to 2 per cent during the Union Budget 2010. The

government had also announced the increase of deduction limit for Research and

Development (R&D) in the sector from 150 per cent to 200 per cent.

CONCLUSION

Automobile industry including auto-components manufacturing industry is

expected to witness higher rates of growth in the coming decades. From a low-key

supplier providing components to the domestic market alone, the industry has

emerged as one of the key auto components centers in Asia and is today seen as a

significant player in the global automotive supply chain. India is now a supplier of a

range of high-value and critical automobile components to global auto manufacturers.

Major auto industry problems include rising oil prices, introduction of fuel-efficient

cars, development of alternative fuel technology and designing of automotives with

recyclable materials.

The potential market for an affordable small car is enormous throughout the

developing world. In the current slow growth environment, inventory is piling up in

all auto manufacturing companies. Auto manufacturers, therefore need to address the

problems of customer demands and market preferences more effectively by

introducing new fuel efficient vehicles, value added and improved aesthetics models

to garner higher market share in the world market.

270

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[email protected]

Mazlan, C. M. M. 2002. Value Management Principles and Applications. Petalng

Jaya: Prentice Hall.

McCarthy, B. F. 2004. Instant gratification or long-term value? Journal of Business

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ISSN 2278– 2540 INTERNATIONAL JOURNAL OF LATEST

TECHNOLOGY IN ENGINEERING, MANAGEMENT AND APPLIED

SCIENCE

Innovative Solutions in Construction Industry

B. L. Dhabhai, Research Scholar, Suresh Gyan Vihar University, Jaipur Email : [email protected]

Dr. J.L. Sehgal IP Chairman I.E.(I) , R.S.C., Jaipur Email : [email protected]

Sh. Shashi Kiran, SDME, Railway, Jaipur Division, Jaipur

ABSTRACT

Current industrial development model has failed to ensure sustainable growth.

Development paradigms must be altered to mitigate the impact of development on

climate change and environment. If developed and developing countries continue to

follow the present development model, irreversible damage will be caused to the

global environment. Construction industry is a major polluting factor across the globe.

Industry must adopt suitable measures to arrest the present trend.

Affordable housing for all is a socio-economic problem. It is not a simple

technological issue or a problem of finance. Infact, it is a complex amalgam of a host

of factors. Use of principles of Value Engineering for effecting cost reduction, latest

technology, alternative materials, processes and innovative solutions are required to

meet the emerging challenges that must be tackled in an integrated and synchronized

manner with a strong political will.

Both central and state governments must help them by taking action as a

facilitator, enabler and regulator to provide shelter to those, who cannot afford houses

for themselves. Sustainable development goals cannot be achieved unless the basic

needs of the population for adequate shelter, food, clothing, education and other basic

human needs are met by the society. Value Engineering methodologies are being used

for cost reduction in Affordable Housing Paradigm.

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INTRODUCTION

Current industrial development model has failed to ensure sustainable growth.

Development paradigms must be altered to mitigate the impact of development on

climate change and environment. If developed and developing countries continue to

follow the present development model, irreversible damage will be caused to the

global environment. Construction industry is a major polluting factor across the globe.

Industry must adopt suitable measures to arrest the present trend.

Inclusive Growth and Sustainable development initiative would not succeed

unless the demands for adequate housing facilities are provided for the economically

weaker sections and underprivileged population by the Govt. The right to adequate

housing is targeted at fulfilling the basic human need and adequate housing facilities

must be assured for every citizen of India. The central and state Governments must

accord high priority to providing affordable houses for slum dwellers, EWS of

society, LIG and MIG-A persons in the country. Cost of land, building materials and

labour have increased phenomenally during the last two to three decades. Use of

principles of Value Engineering, latest technology, alternative materials, processes

and innovative solutions are required to meet the emerging challenges. Economically

weaker sections of the society are unable to acquire proper shelter to meet the needs

of their family. Value system of the entire population and governance procedure must

be improved only then the budgetary allocations will percolate down to the

beneficiaries in real sprit.

Therefore, both central and state governments must help them by taking action

as a facilitator, enabler and regulator to provide shelter to those, who cannot afford

houses for themselves. Sustainable development goals cannot be achieved unless the

basic needs of the population for adequate shelter, food, clothing, education and other

basic human needs are met by the society.


technological issue or a problem of finance. Infect, it is a complex amalgam of a host

of factors. Innovative solutions are required to meet the emerging challenges that

must be tackled in an integrated and synchronized manner with a strong political will.

Value Engineering methodologies are being used for cost reduction in Affordable

Housing Paradigm.

273

BACKGROUND

Key parameter metrics of climate change, disaster management and building

resilience are interlinked and interdependent. Therefore, business leaders of global

enterprises should adapt to the impacts of climate change on Planet Earth for

furtherance of their common interests. Because of inertia in the system, climate-

change and its impact will continue for several years, even if we take stringent

measures to reduce and mitigate the effects of the GHG emissions across the globe. It

is crucial to lay stress on the use of renewable energy products and traditional

biomass, since it would help to accelerate the provision and availability of electricity

for nearly 2.7 bn persons in the world. All human activities for business will be

affected adversely due to impacts of climate change, pollution and emissions. Nearly

20-30% species will be subjected to increased risk of extinction, if global warming

exceeds 1.5 to 2.5oC. All countries should embark on a path of resource-efficient

development model at the earliest to save the interests of posterity. If the developing

countries continue to pursue an economic pattern similar to the model of developed

countries, it will lead to crises of complexities and ever increasing problems, for the

world population.

EFFECTING ECONOMY IN CONSTRUCTION OF AFFORDABLE HOUSES

Following points for economy are considered:-

1. A few States Housing Boards in India are using special bricks of 19 cm size

(Modular brick masonry).

2. For super structure use 1:6 cement ratio material upto Ground+1 Floor only.

3. Use Honey comb brick (HCB) masonry for providing shelter for economically

weaker sections of society for Windows and ventilators.

4. Pre-fabricated solid or hollow building blocks and components are used made

of Cement Concrete.

OR Use Stone blocks of locally available materials including sand stone, cement &

grit as per mix design according to locally available materials.

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OR Use blocks of Earth mixed with 5% cement.

5. For Roof - Use prefabricated joists and planks Reinforced brick concrete

roofing (filler slab).

6. For Stairs, water storage tanks, cooking platforms, door frames and doors

using Ferro-cement technology.

7. Use cheaper building materials like, Agriculture and Industrial waste. Use Red

mud waste released from Aluminium plants, Blast Furnace slag, Fly ash of

thermal power plants, rice-husk, coco-nut husk etc.

8. Use brick arches. instead of RCC/stone lintels.

9. IIT Chennai has developed alternative walling & roofing panels glass fiber re-

inforced gypsum (GFRG) to replace load bearing brick walls and RCC slabs in

a multi-storey building (eight storey). Pre-fabricated panels made of GFRG

are also resistant’s to earth quakes. This material is expected to usher in an era

of cheaper mass-scale affordable housing. Results of IIT Chennai research

project have been reported in Hindu Daily of 08.04.2013. This material is

suitable for speedy construction. A GF+1 Building with four units (Two units

for EWS and Two for LIG) has been constructed in IIT campus in 29 days

only, which was inaugurated 08.04.2013. Pre fabricated panels are cut to size

for walls including opening for doors and windows based on room sizes. A

panel has 2 skins of 15 mm thickness that are interconnected at regular

intervals of 25 cm. These cavities are filled with RCC and are used for electric

and sanitary piping purposes.

10. Use Brick Load bearing walls instead of RCC columns.

11. For Flooring:

Use on edge brick floor

OR use 40mm thick grit with cement in the ration of 1:4:8 size or use Indian Patent

surface (IPS) materials (Cement Concrete flooring).

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OR use Rammed mud flooring (RMF) only and leave it for the allottee to provide

any desired material flooring later.

12. For provision of facilities, use single stack system in multi-storey flats, which

connects sewerage & waster water of WC, bath & kitchen.

SHORTAGE OF HOUSING IN RAJASTHAN

Let us consider a case of Rajasthan State in India. The state of Rajasthan has

the largest area comprising 10.41% in the country and the state can easily adopt an

approach for planned urbanization in future. According to 2011 census figures the

national average urbanization figure stands at 31.16% and in Rajasthan urbanization

figure is 24.89% only. However, the housing shortage is growing every year.

Total housing shortage in Rajasthan was estimated in 2007 as 10.70 Lakhs.

Out of of the above housing shortage figures, 90% belongs to EWS/LIG/MIG-A

category. Housing shortage for needy persons is expected to increase to 13.48 Lakhs

in 2017 and 18.52 Lakhs in the year 2021. Unless proper measures are planned and

executed early in right earnest, the problem can assume gigantic proportions in future.

Person with income lower than Rs.5,000/- p.m. is included in the list of economically

weaker sections (EWS).

Person with income lower than Rs.15,000/- p.m. is included in the list of low income

group (LIG).

Person with income lower than Rs.25,000/- p.m. is included in the list of middle

income group-A(MIG).

The Government of India(GOI) has prepared a national policy guide line policy for

affordable housing. The Government of Rajasthan (GOR) has prepared policy guide

lines as per Affordable Housing policy – 2009 Affordable Housing Policy – 2009 was

prepared by Urban Development ; Housing Department (UDH) of GOR.

Township Policy – 2010 and Slum Housing Policy – 2009, Rajasthan Urban Housing

& Habitat Policy (RUHHP) and Transfer of Development Rights (TDR). GOR had

also constituted the State Commission on urbanization in 2010. A working group was

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also constituted to plan methodologies on “Affordable Housing for All” with the

horizon year 2030. Chief Town Planner is acting as Advisor for the working Group.

Further more, GOR had planned to take series of measures to mitigate the problem of

shortage of affordable houses in the state.

Housing shortage can be categorized as follows:

Families who do not have a house of their own.

Families living in temporary serviceable houses.

Families living in temporary unserviceable houses.

Obsolescence houses.

Families (of 6 to 9 members) living in congested (one room) houses without any

privacy. They need an additional room.

Families living in semi-permanent house.

A Task Force was constituted by the Central Government to study the problem of

housing shortage in the country and recommend measures to solve the problem.

The report prepared by the Task Force appointed by the Government of India (G.O.I.)

and adopted by the GOR has recommended following guidelines:

EWS/LIG MIG - A

Size 300-600 Sq.ft carpet area Not exceeding 120 Sq.ft. carpet area

Cost Not exceeding 4 times the Gross Household Annual Income Not exceeding

five times household gross Annual Income

EMI/Rent Not exceeding 30% of Gross Monthly Income Not exceeding 40%

gross monthly income

Size of the household was visualized as five members only. It is worth noting that

GOR is constructing affordable houses well with in the above cited limits of the GOI

task force.

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OBJECTIVES OF AFFORDABLE HOUSING

a. To reduce the shortage of housing for EWS/LIG/MIG-A categories in Rajasthan

b. To take up large scale construction of affordable houses with focus on

EWS/LIG/MIG-A houses.

c. To bring down the cost of EWS and LIG categories to affordable limits.

d. To promote investments in urban housing sector in PPP mode.

e. To involve private developers in the construction of EWS/LIG categories of houses

by offering them attractive incentives.

f. To create rental housing for migrant population in urban areas, and

g. To check further creation of slums in future.

National Commission on Affordable Housing was constituted by G.O.I. and

various states have constituted their state commissions.

AFFORDABLE HOUSING PROGRAM IN RAJASTHAN

More than 70% population cannot afford good or adequate shelter, hence there

is a strong case for taking initiatives to build affordable houses to meet this huge

requirement.

Committees of experts, academicians, scientists and research personnel have

arrived at a consensus regarding preparation of policy guide lines, laying down of

standards, specifications and schedules of locally available cheaper building

materials, technologies and processes for housing construction various categories of

personnel including MIG-A, LIG, EWS and slum dwellers.

Long term actions plans and programmes have been prepared to build the

required number of houses in three or more phases.

Soft bank loans, Govt. subsidies and required financial facilities will be

provided to the beneficiaries as recommended by the, National and State

Commissions (Housing) high power committees.

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Rajasthan Govt. has formulated following policies:

Affordable Housing Policy – 2009

Slum Housing Policy – 2009

Township Policy – 2010

Transfer of Development (TDR) Rights Policy – 2012

Rajasthan Urban Housing and Habitat Policy (RU HHP) – (under preparation)

A working group was constituted to prepare methodologies on Affordable Housing

vision – 2030. Chief Town Planner and country Planning serves as advisor to the

commission.

Houses are being constructed in Rajasthan under the following housing schemes and

models:-

General Housing Schemes for the urban poor. Houses are constructed under this

scheme in following categories

General, self financing schemes(SFC).

Housing schemes of district development agencies including municipalities.

Private Public Partnership (PPP) Schemes.

New Township Development Schemes and Group Housing Schemes.

Rental Housing schemes

Rajasthan schemes for urban slums:

Basic Services for urban Poor (BSUP)

Integrated Housing and Slum Development Programme (IHSDP) under JNNURM

and Rajiv Avas Yojna (RAY)

Affordable Housing in Partnership in slum areas with prime land values.

Rental Housing Scheme in Slum Areas.

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Model -I

Under this model land is allotted by ULB’s and Housing Board constructs the houses

land cost will be subsidized by the GOI/GOR. Houses are allotted by ULB’s as

follows:

LIG/EWS – 50%

MIG-A – 20%

Provision for grant of extra FAR/FSI is made

Where houses are constructed by Private Developers or Group Housing

Schemes are 15% of dwelling units or 5% of total residential area of the scheme

(which ever is higher) are earmarked for EWS/LIG and handed over to the NODAL

Agency for further allotment to the beneficiaries.

Model –II

Under this model houses are built by private developers on land owned by

them. Selected developers construct flats on Ground G+2/G+3 format for EWS/LIG

on minimum of 40% of land. These houses are handed over to Nodal Agency for

allotment at pre-determined prices. Special incentives are given to the developer, like

double FAR, TDR facility, waiver of the External Development Charges (EDC) fast

track approval and building plan approval fee. Also, the developer is allowed 10% of

total land for commercial use. Developer would be free to construct MIG/HIG/ flats

on the remaining land as per his choice.

Model-III

Under this model houses are built on acquired land. The selected private

developer can take up construction of EWS/LIG flats under G+2/G+3 format on the

land under acquisition by ULB’s. developer is charged land acquisition cost +10%

administrative charges. All other parameters to be followed and incentives etc. given

to the developer would remain same as per Model-II.

Size and cost of EWS/LIG/MIG-A flat under construction cost to be paid to

builder w.r.t. super built up area is Rs.2.40/Rs.3.75/Rs.7.00 lacs respectively. And

280

cost charged from beneficiaries is Rs.1.90/Rs.3.25/Rs.7.00 lacs sale value is subject to

review from time to time. Government subsidy of Rs.50,000 maximum is allowed for

EWS and LIG persons only.

Model-IV

Under this model houses are built on Govt. land for rental housing or outright sale.

Earmarked Government land is offered free of cost to be selected through open

bidding process. The developer offering the maximum number of EWS/LIG flats built

on G+2/G+3 formats free of cost to the uLB is awarded the project. At least 50% of

houses should be of EWS category.

The developer wil be free to use the remaining land as per his choice for residential

purpose with 10% for commercial use. The rest of the parameters would be as per

model no.II.

Model-V

Under this model houses are built for Slum Housing. Slum housing schemes include

the following:-

Basic services for Urban Poor (BSUP)

Integrated Housing Slum Development Programme (IHSDP) of G.O.I.

Rajiv Gandhi Avas Yojna (RAY). It has two parts:

For slum dwellers.

To prevent creation of new slums

PPP model in slum Housing. FSI & will be permitted as per slum housing policy.

Rental Housing

Rental housing plays a passive role in the housing market. Rental Housing is

created for migrant population & transit accommodation for general public and slum

dwellers on BOT/BOLT basis. by private developers.

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As per 2001 census, households living in rented houses in Rajasthan is 18.06% or

3,99,766 persons.

Rental housing includes following categories:-

One room & two room flats with WC bath & Kitchen

Dormitories with common toilets in (G+2/G+3) formats

Rooms with toilets only.

Rooms with Community toilets

As per recommendations of the GOI set up Task Force, it is to be ensured that

rent charged is not more than 30% of gross monthly income for EWS/LIG and not

more than 40% for MIG-A, general and slum dwellers For Hire-purchase houses

incentives are given to EWS/LIG, including lump sum of Rs.0.50/- lacs, stamp duty

Rs.10/- Rs.25/- for EWS/LIG and interest subsidy of 5% of EMI upto a loan of Rs one

lacs.

Incentives For Developers

Incentives for developers – include 10% of land for commercial use and permission to

develop 60% of area for HIG/MIG flats for cross-subsidising of EWS/LIG flats.

Finances For Affordable Housing

Initially registration amount and subsequently seed money will be deposited by the

beneficiaries.

Also, bank loans are arranged for the allot tees.

Land For Affordable Housing

Generally 60% of EWS and LIG housing land requirement occupy 30% of

land and 40% o MIG/HIG housing occupy 70% of land in cities. However,

BPL/EWS/LIG persons service the needs of occupants of MIG/HIG housing.

Recommendations of Task Force Appointed by GOI

Additional lands may be brought urban usage on a regular basis by simplifying

procedures and processes for conversion of agriculture land for urban use.

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Review of Master Planning

Treat Affordable housing as a public purpose.

Conclusions

Affordable housing fulfills the needs of BPL EWS and LIG persons of society.


technological issue or a problem of finance. Infect, it is a complex amalgam of a host

of factors. Innovative solutions are required to meet the emerging challenges that

must be tackled in an integrated and synchronized manner with a strong political will.

automobile industry vision - 2025 -...

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