AUTOMOBILE INDUSTRY

OVERVIEW OF AUTOMOBILE INDUSTRY

Introduction
The Indian auto industry became the 4th largest in the world with sales
increasing 9.5 per cent year-on-year to 4.02 million units (excluding two
wheelers) in 2017. It was the 7th largest manufacturer of commercial
vehicles in 2017.
Automobile exports grew 20.78 per cent during April-November 2018. It
is expected to grow at a CAGR of 3.05 per cent during 2016-2026.

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OVERVIEW OF AUTOMOBILE INDUSTRY
Market Size
 Domestic automobile production increased at 7.08 per cent CAGR between FY13-18 with
29.07 million vehicles manufactured in the country in FY18. During April-November 2018,
automobile production increased 12.53 per cent year-on-year to reach 21.95 million vehicle
units.
 Overall domestic automobiles sales increased at 7.01 per cent CAGR between FY13-18 with
24.97 million vehicles getting sold in FY18. During April-November 2018, highest year-on-year
growth in domestic sales among all the categories was recorded in commercial vehicles at
31.49 per cent followed by 25.16 per cent year-on-year growth in the sales of three-wheelers.
Premium motorbike sales in India crossed one million units in FY18.
Sales of electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017-18.

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OVERVIEW OF AUTOMOBILE INDUSTRY
Investments
The industry has attracted Foreign Direct Investment (FDI) worth US$ 19.29 billion during the
period April 2000 to June 2018, according to data released by Department of Industrial Policy
and Promotion (DIPP).Some of the recent/planned investments and developments in the
automobile sector in India are as follows:
Hyundai is planning to invest US$ 1 billion in India by 2020. SAIC Motor has also announced
to invest US$ 310 million in India.
As of October 2018, Honda Motors Company is planning to set up its third factory in India
for launching hybrid and electric vehicles with the cost of Rs 9,200 crore (US$ 1.31 billion), its
largest investment in India so far.
Ashok Leyland has planned a capital expenditure of Rs 1,000 crore (US$ 155.20 million) to
launch 20-25 new models across various commercial vehicle categories in 2018-19.

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OVERVIEW OF AUTOMOBILE INDUSTRY
Government Initiatives
The Government of India encourages foreign investment in the automobile sector and allows
100 per cent FDI under the automatic route. Some of the recent initiatives taken by the
Government of India are –
The government aims to develop India as a global manufacturing centre and an R&D hub.
The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the country
for introduction of electric vehicles (EVs) in their public transport systems under the FAME
(Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The
government will also set up incubation centre for start-ups working in electric vehicles space.

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OVERVIEW OF AUTOMOBILE INDUSTRY
Road Ahead
Indian automotive industry (including component manufacturing) is expected to
reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers are
expected to grow 9 per cent in 2018.

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SUSTAINABILITY ISSUES IN AUTOMOBILE INDUSTRY
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ISSUES
FACED
• The automotive industry is one of the most
environmental aware manufacturing sectors.
• Product take-back regulations influence design of the
vehicles, production technologies but also the
configuration of automotive reverse supply chains.
• Volkswagen Emissions Scandal is a classical
example in this sector which shows corporate
misbehaviour of Volkswagen when it rigged its
diesel engines to falsify emissions test.
• Leadership failures of this type are often due to
failure in character, not a lack of competencies or
commitment.

VOLKSWAGEN
EMISSIONS SCANDAL
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• The scandal is a major setback for Volkswagen.
• This is not an usual recall issue, an error in
calibration or even a serious safety flaw.
• The accusation is that Volkswagen deliberately set
out to mislead regulators with a cleverly hidden
piece of software.

ANALYSTS’ REACTION
TO THE SCANDAL
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SUSTAINABILITY PRACTICES FOLLOWED IN INDUSTRY
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 IMPORTANCE
• The automotive industry doesn’t only consume raw materials, it’s also a contributor to
waste and pollution around the world. Sustainability shouldn’t be viewed as a gimmick,
it’s rather a form of responsibility.
• In respond to challenge in this sector, various initiatives focused around sustainability
tracking, reduced energy costs, increased renewable energy.
• Use and innovation in product offerings should start being implemented by automakers
and manufacturers. It’s important to have a balanced relationship between profits,
environmental, and social responsibility in order to set positive industry standards.

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 MEASURES TAKEN
• GREEN PRODUCTION:The manufacturing of cars has been one aspect of the auto industry
where green business practices have been lacking for years now. However, in the last five years,
car manufacturing has made a significant transition into the green initiative by incorporating far
more recyclable materials into car production, choosing fuel alternatives that allow companies to
reduce their fossil fuel intakes, and making car parts that are overall more reliable and eco-
friendly.
• Aluminum is so lightweight and malleable, this means that it can be used to manufacture any
car, reduces the fuel intake of said cars, and also is easily recyclable likewise. This will ultimately
lead to a far more efficient, cheaper, and more environmentally friendly mode of transportation
that can be quickly recycled and redistributed likewise.
• Fuel alternatives, it is clear that many car companies have begun to turn to electric power and
various other forms of fuel so as to reduce their carbon footprint and the sheer amount of oil
used daily. A new revolutionary aluminum-air battery is said to be capable of 1,000 miles gas-
free before needing to be recharged. With this said, not only would this reduce the need for fuel
drastically, but it would also save time .On top of this, to reduce this risk even further, it is said
that there will be quick-charge devices which individuals will be able to purchase to quickly give
their cars a boost, even when there are no charging stations nearby.

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 MEASURES TAKEN
• Lastly, the parts a car needs can often be comprised of materials that are not easy to
recycle, wind up sitting for decades in a junkyard, and break easily after a few years worth
of use. Therefore, many car part companies have joined the green initiative by simply
providing parts materials that are eco-friendly, recyclable, and durable. For instance,
currently, tires are going eco-friendly by using durable green materials. This allows for the
average consumer to purchase green tires that are durable for the same price, if not less,
than other non-green alternatives.

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 EXAMPLES
• General Motors Creative Reuse and Zero Waste Initiatives-
General Motors manufactures around 9.9 million cars a year and has a creative materials reuse program that reuses
metal pieces, worn tires, and the packaging of supplies.
The zero-waste mindset at GM diverts 100% of waste from landfills in Canada, Mexico, and South America. Currently
GM has a total of 142 landfill free facilities and generated $2.5 billion in revenue between 2007 and 2010 through
various recycling activities. The corporation’s total elimination of waste is having an immediate impact on carbon
dioxide emissions as well. During 2015, about 8.9 million metric tons of carbon dioxide-equivalent emissions were
prevented from entering the atmosphere because of its reuse and recycling programs.

• The Toyota Environmental Challenge-

Toyota Motor Corporation has created the “Toyota Environmental Challenge 2050” to reduce environmental impact
and to aim for “Challenge to Zero and Beyond.” In continuing its commitment to address environmental issues, Toyota
has reached more than 10 million cumulative units of hybrid vehicle sales globally, including plug-in hybrids. It is
estimated that Toyota’s hybrid technology has helped save more than 7.66 billion gallons of gasoline worldwide .

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 EXAMPLES
• Honda Motors
The first car manufacturer to disclose its greenhouse gas (GHG) emissions from its business operations and customer use of its
products is Honda. In 1998, Honda was the first—and only—automaker to mass-produce a passenger car that ran on natural
gas, called the Civic GX. Then, 2 years later, they were also the first (in North America) to introduce a low-emissions hybrid,
called the Insight. These manufacturing advances are reflected in the development process, as Honda claims its products are to
be 99% recyclable at end-of-life. Recycled or natural materials like sugar cane are used in the manufacturing materials of the
Honda Clarity’s instrument panel, as well as the sun visors, roof lining, seat upholstery, step garnish, and the ultra-suede trim
on the Touring version. In line with their main goals, Honda has promised to make every effort to contribute to the preservation
of human health and the global environment within each phase of its corporate activity.
• Sustainable Landscaping Preserves Environment and Looks Good – In an effort to conserve natural resources, improve
habitat and lower costs, Ford has installed nearly 200 acres of sustainable landscaping around its corporate properties in
Dearborn and Allen Park, Mich. The comprehensive grounds maintenance plan incorporates fields of wildflowers, natural
prairies and fallow fields. Several prairie fields are designated “Grow Zones,” meaning they contribute to a sustainable
environment by preserving natural resources, providing wildlife habitat, absorbing rainwater, reducing erosion and saving
maintenance costs.
• FOCUS IS TO RECYCLE MORE THAN 80 PERCENT- 75 percent of an automobile’s content is recycled – including
steel, iron, aluminum, copper and other non-ferrous metals.
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REGULATORY NORMS IMPOSED ON AUTOMOBILE
INDUSTRY BY THE GOVERNMENT

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INTRODUCTION OF BHARAT STAGE NORMS:

The Bharat Stage are standards instituted by the government to regulate

emission of air pollutants from motor vehicles.
The norms were introduced in 2000.
With appropriate fuel and technology, they limit the release of air
pollutants such as nitrogen oxides, carbon monoxide, hydrocarbons,
particulate matter (PM) and sulphur oxides from vehicles using internal
combustion engines.
As the stage goes up, the control on emissions become stricter.

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DIFFERENCES BETWEEN TWO STAGES
The extent of sulphur is the major difference between Bharat Stage IV and Bharat
Stage VI norms.
BS-IV fuels contain 50 parts per million (ppm) sulphur, the BS-VI grade fuel only has
10 ppm sulphur.
BS VI can bring PM in diesel cars down by 80 per cent .
The new norms will bring down nitrogen oxides from diesel cars by 70 per cent
and in petrol cars by 25 per cent. BS VI also make on-board diagnostics (OBD)
mandatory for all vehicles. OBD device informs the vehicle owner or the repair
technician how efficient the systems in the vehicle are.

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 REGULATORY NORMS
• Recycling Policy
By 2025 there could be 22 million obsolete vehicles in India that would need recycling.
Vehicle recycling is currently an unorganized industry in India, Because of lack of regulations vehicle
poses risk to our health and environment.
Ceri recycling , the first organised player in the industry, started operation.
• EPR and regulations in other countries-
EPR stands for Extended Producer Responsibility .India introduced EPR in its plastic waste
management rules 2016.
• Reduction of Benzene level in petroleum.
The level of Benzene has been reduced to 1% which is in accordance with international countries.
• Promotion of e-vehicles
According to the fresh proposal, the govt will first begin creating favourable ecosystems in nine
polluted cities with a population of over four million, and gradually move to cities with populations
of one million-plus.
• Challenges and support:
Government is taking major steps like promoting electric vehicles manufacturing,
setting up charging infrastructure, promoting electric vehicles in commercial fleet and the role of
renewable energy in electric mobility. 20
Making electronic vehicle facility more accessible and convenient.
 REGULATORY NORMS
• Introduction of AHO technology
In a bind to make roads safer for two-wheelers in India, the government has
reportedly decided to mandate 'Automatic Headlamp On' (AHO)
Experts from automobile safety found that AHO has improved visibility of and for
two-wheelers during day and at dawn and dusk.
According to a report, two-wheelers accounted for being the single category of
vehicles that have met with the highest number of fatal road crashes

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 CASE STUDY
CASE:
In April 2017, a US federal judge ordered Volkswagen "to pay a $2.8 billion criminal fine for
rigging diesel-powered vehicles to cheat on government emissions tests". The
"unprecedented" plea deal formalized the punishment which VW had agreed to..
VW revises previous estimates on CO2emissions irregularities, saying that only around 36,000
vehicles are affected.
Volkswagen announces plans to refit up to 11 million vehicles affected by the emissions
violations scandal
The International Council on Clean Transportation(ICCT) is an independent non-profit
organization incorporated under Section 501(c)(3) of the US tax code . It provides technical
and scientific analysis to environmental regulators.

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CHALLENGES FACED BY THE INDUSTRY

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SCOPE OF IMPROVEMENT IN THE INDUSTRY
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FUTURE OF THE
INDUSTRY
• The biggest change is the massive growth in India over the past
few years. The rise of the automotive industry in the country does
not look like it is slowing down anytime soon.
• Indian car manufacturers are constantly working on ways to
counter the increasing effects of traffic and pollution.
• The government has also made a move to improve the emission
standards in the country and bring it on par with the rest of the
world.
• The government is also planning to bring an Electric vehicle
revolution in the country by the year 2030. This step has been taken
by the government in order to reduce the amount of pollution in
the country by cutting down the emission from vehicles.

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 With electrification catching up fast, the world’s economy may change
from being an oil-driven to lithium, cobalt, etc.

The country falls extremely behind in the lithium and cobalt reserves.
It needs to speed up in securing lithium.

CHANGING India is one of the most important markets for various overseas

AUTO automakers, which includes largest market for Suzuki Corporation as it

gets over 50 per cent of its business share from here.

INDUSTRY The other most favorable part for India is increasing software content in
the automobiles. India is emerging as one of the largest exporters of
LANDSCAP connected and software solutions for automobiles.

E The Indian automobile industry is highly supported by factors such as

availability of skilled labour at low cost and low-cost steel production.

India is also leapfrogging to advanced emission and safety norms that

will make it more compatible and level playing field for the foreign
automakers.
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EVOLUTION OF GLOBAL ELECTRIC CAR

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 NISSAN SUSTAINABILITY
Environment
Ensuring that people, cars and
the environment can co-exist is
a dominant theme at Nissan. In
every aspect, from design to
manufacturing and sales to
recycling, we spare no effort to
produce cars that are friendly to
the environment.
Zero Emission
At Nissan, we are investing in a
portfolio of "green"
technologies, including clean
diesels, efficient internal-
combustion engines, hybrids
and the centerpiece of our
product strategy: zero emission
vehicles, such as electric cars
and fuel cell vehicles.
Safety
The "safety shield" concept- where we
employ the latest technologies to
actively protect passengers—is the
foundation of our comprehensive
efforts toward safety. We are
continually developing advanced safety
technologies while also devoting
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resources to traffic safety education to
raise public awareness.
 COMPANY TAKING INITIATIVES
IN SUSTAINABLE DEVELOPMENT

Ford Motor Toyota Tata Motors

Company

Nissan Maruti Mahindra &

Suzuki Mahindra

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THANK
YOU!