Automobile Industry Essay

* Detailed analysis of gondolamobile perseverance which is gearing towards planetary standards. * Analysis of the impact of qualitative factors on industriousnesss and companys prospects. * Comparison of the Global ride automobile scene with its Indian precludepart. * Study of the challenges facing the Indian railroad carmobile Industry * Analysis of the implementable strategies to counter the effects of the discussed challenges. PREFACE The self-propelled fabrication in India is one of the largest in the world and one of the blistering growing orbiculately.The Indian Automobile Industry embarked on a new journey since 1991 with delicensing of the field and subsequent opening up for 100 per cent FDI through automatic r out(a)e. Al some all the global study thrust set up their facilities in India taking the future(a) direct of mathematical product of fomites from 2 trillion in 1991 to 110+ million in 2011. The Auto Sector in India is set to continue in its growth tr ajectory for the next five years and India is an change magnitudely favourite destination for Global study looking at emerging market.This in turn, has fuelled a boom in the domestic auto market, with close to 10mn fomites sold in India in 2009-10 The self-propelling pains is increasingly becoming the cynosure of the manufacturing sector across the globe. Due to its intense forward and backsideward linkages with several gravestone incisions of the thriftiness, the self-propelled industriousness has a strong multiplier effect and acts as one ofthe key drivers of growth across the globe. The attention and importance to the automotive industriousness in the economic development and planning policies of ad miniskirtstration and its agencies has as well as witnessed significant up rise.The assiduity has been evolving over the years, meeting up with challenges as diverse as transitions, consolidations and restructuring, and thereby adapting to the new market conditions. As of 2011, India is kinfolk to 40 million passenger vehicles. More than 3. 7 million automotive vehicles were produced in India in 2011 (an increase of 33. 9%), making the country the second fastest growing automobile market in the world. gibe to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and much than 9 million by 2020.By 2050, the country is expected to top the world in railroad railway car volumes with approximately 611 million vehicles on the nations roads. OVERVIEW The Indian Automobile Industry manufactures over 11 million vehicles and exports or so 1. 5 million each year. The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three-wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes.The industry has a turnover of to a greater extent than USD $35 meg and get outs direct and indirect utilisation to over 13 million people. The depict mountain chain is similar to the supply chain of the automotive industry in Europe and America. Interestingly, the level of trade exports in this sector in India has been medium and imports commit been low. However, this is rapidly changing and both exports and imports are increasing. The beseech determinants of the industry are factors equal affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is full(prenominal) gear and increasing, and its life cycle defend is growth.With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. With a high cost of developing production facilities, limited accessibility to new engineering, and increasing competition, the barriers to enter the Indian self-propelled sector are high. On the other hand, Ind ia has a well-developed tax structure. The power to impose taxes and duties is distributed among the three stages of governing. The cost structure of the industry is fairly handed-down, but the profitability of motor vehicle manufacturers has been rising over the past(a) five years.Major frolicers, want Tata motors and Maruti Suzuki shoot corporeal cost of about 80% but are recording profits after tax of about 6% to 11%. The level of technology change in the motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated genes and sub-systems take a shit become the order of the day. However, further investment in new technologies will help the industry be much competitive. Over the past few years, the industry has been volatile.Currently, Indias increasing per capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major place in the rise and fighting of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India Limited and Mahindra and Mahindra are focusing expanding their footprint in the over seas market. Hero MotoCorp is occupying over 41% and sharing 26% of the two-wheeler market in India with Bajaj Auto.Bajaj Auto in itself is occupying about 58% of the three-wheeler market. Consumers are precise important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of vane is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy.The key t o success in the industry is to improve labor productivity, labor flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilizing manufacturing plants to optimum level and discernment implications from the politics policies are the essentials in the Automotive Industry of India. Both, Industry and Indian government activity are obligated to intervene the Indian Automotive industry.The Indian political sympathies should facilitate infrastructure creation, create favorable and predictable calling environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and amend productivity in labor and in capital. With a combined effort, the I ndian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. The Indian market furnishs endless possibilities for investors. HISTORY The first car which ran on Indian roads was in 1897.Until the 1930s, cars were imported directly, but in very itsy-bitsy numbers. Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was realized by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from Willys. The company soon branch out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry.However, the growth was relatively slow in the 1950s and 1960s due to nationalization and the license raj which hampered the Indian private se ctor. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the origination of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies. In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles.It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalization in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands. Following economic liberalization in India in 1991, the Indian automotive industry has demo sustained growth as a result o f increased competitiveness and relaxed restrictions.Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. Indias robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers. In February 2009, a monthly sale of passenger cars in India exceeded 100,000 units and has since grown rapidly to a record monthly high of 182,992 units in October 2009. From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example) this feeler is unlikely to stop in the coming decade. Congestion of Indian roads, more than market demand, will likely be the limiting factor. SIAM is the apex industry tree trunk representing all the vehicle manufacturers, hom e-grown and international, in India. INDUSTRY OVERVIEW This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines. Products and Services The primary activities of this industry are * Motor cars manufacturing.* Motor vehicle engine manufacturing The major products and services in this industry are * Passenger motor vehicle manufacturing segment (Passenger Cars, profit Vehicles &Multi Purpose Vehicles) * Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles) * Two-Wheelers * Three-Wheelers Key Auto Segments Growth Expected to moderate over the next 12 months Financial family 2012 was a landmark year both in a positive and disconfirming manner. It paved way for many breakthrough launches saw the launch of segment defining Fluidic Verna, excellent value for money XUV 500, Hyundais entry level offering Eon and many more.It also displayed its sudden love for MPV/MUVs in the Auto Expo Marutis Ertiga, Chevrolets Enjoy and Nissans Evalia were the most sought after showcase at the expo. We were now exposed to the hard truth as well that how labour intensive the auto industry is. A labor strike can strike at Maruti shook the entire Auto Industry. The airstream took its toll on the overall numbers. This was further catalyzed by inflation, consistent fuel hikes and rising auto interest rates. The worlds fastest growing automobile market was now under analysts scanner for its sheer volatility.Demand for cars fell for the first time in three years last July and slumped by the most in over a decade in October. SIAM which had projected a growth of over 20% had to instantly lower its projections. The Industrys lacklustre performance reflected in the overall performance of the country. In a recent report, S&P cut its outlook on Indias BBB- rating to negative from stable. This is surely not a good news for the Indian Industry in overall. The low-end hatchbacks were the ones to take the beating in FY12.For perhaps the first time in many years, small cars reported a decline in growth in 2011-12 (FY12), largely on account of Maruti Altos decline. Now, SIAM has forecast 10-12 pct growth in overall passenger cars for this fiscal, but this number may be lower if small car growth is again hindered. SIAM data showed that the mini car segment which comprises Maruti 800, Alto, A-Star, and WagonR, the Chevy Spark and Hyundais Santro and Eon declined by about 7 percent to 6,42,009 units (6,90,812 units) last fiscal. Sales of the Alto, the single largest selling car in India, had fallen by about 11 percent between April and February 2012.Also, for the first-time ever, bigger diesel cars the SUVs are selling more and there is no slowness in dieselization. Indias largest automaker, Maruti Suzuki, expects car sales to increase by 10 per cent in the fiscal year beginning in April led by diesel models. Diesel car sales are expected to rise by 150,000 in 2012-13 while sale of petrol cars fall by 50,000, state the company. OVERALL HIGHLIGHTS * Car sales in India bloom just 2. 2 percent in FY2012 * Sales of motorcycles rose 12 percent in the previous fiscal year to 10. 1 million vehicles (10,096,062 units). * Scooter sales shot up 24.5 per cent, to 2,562,841 units. * Total two-wheeler sales were 13,435,769 units in 2011-12 against 11,768,910 units in 2010- 11, up 14. 2 per cent. * Commercial vehicles, Siam verbalise total sales in FY12 were 809,532 units, up 18. 2 per cent. * Three-wheeler segment that saw a decline of 2. 4 per cent at 513,251 vehicles in FY12. PROJECTIONS FOR FY2013 * SIAM has projected passenger car sales growth at 10-12 per cent in 2012-13. * Sales of trucks and buses, a key indicator of economic activity, rose 18. 2 percent in 2011/12 and are seen growing 9 to 11 per cent in this fiscal year.* SIAM has pegged the motorcycle segment to grow 10-12 per cent in FY13 and scooters by 15-17 percent. Two wheeler segment is expected to have a growth of around 14-15%. * C ommercial Vehicles is projected to grow by nine to 11 per cent in FY13. * SIAM has also projected five to seven per cent growth for Three Wheelers. Domestic car sales expecting growth to moderate next year SUPPLY CHAIN OF AUTOMOBILE INDUSTRY The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America.The orders of the industry arise from the bottom of the supply chain.ie. From the consumers and goes through the automakers and climbs up until the third tier suppliers. However, the products, as channeled in every traditional automotive industry, go down from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. * Third Tier Suppliers These companies provide basic products like rubber, glass, stee l, plastic and aluminum to the second tier suppliers.* Second Tier Suppliers These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. * First Tier Suppliers These companies provide major systems directly to assemblers. These companies have global coverage to follow their customers to various locations around the world. They design and innovate to provide black-box solutions for the requirements of their customers.Black-box solutions are solutions created by suppliers using their own technology to meet the performance and port requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, brakes-axle-suspension, seats, or cockpit but also for the solicitude of second-tier sup pliers. * Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs) After researching consumers wants and necessarily, automakers begin designing models which are tailored to consumers demands. The design process normally takes five years.These companies have manufacturing units where engines are make and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. macrocosm, design skill and branding are the main focus of these companies. * Dealers Once the vehicles are ready they are shipped to the regional branch and from there, to the authorized dealers of the companies. The dealers then sell the vehicles to the end customers.* split and Accessory These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. * Service Providers Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. some dealers provide these services but, customers can also choose to go to independent service providers. EXPORTS Indias automobile exports have grown consistently and reached $4. 5 billion in 2009, with United Kingdom being Indias largest export market followed by Italy, Germany, Netherlands and South Africa.Indias automobile exports are expected to cross $12 billion by 2014. According to New York Times, Indias strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki. In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India.Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch galvanic vehicles in Europe. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U. S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U. S. market.Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens. Passenger car exports from India increased 34.16% in may, riding on the back of robust overseas sales by Hyundai Motor, Nissan Motor and Toyota Kirloskar in non-European countries. According to figures released by Society of Indian Automobile Manufacturers (SIAM), India exported 45,036 cars in the last month compared to 33,570 units in the year-ago period. Europe still continues to be a worry, but the growth that we have seen is mainly on account of new markets that the companies have developed, SIAM Director General Vishnu Mathur said. In whitethorn, the countrys largest exported Hyundai Motor India Ltd (HMIL) witnessed a growth of 42.16% at 23,659 units against 16,643 units in the same month last year. On account of slackness in the domestic market in May, we took the opportunity to ramp up the back orders for the export market. We had higher sales of the Eon in Algeria, the i20 in South Africa and the i10 in South America, partic ularly in Mexico and Columbia, a spokesperson of HMIL said. However, rival and domestic market leader Maruti Suzuki Indias overseas passenger car sales fell by 9. 42% to 9,363 units from 10,337 units in May 2011, SIAM said.Car maker Nissan Motor India saw its exports from the country going up by over two-fold to 8,157 units last month from 3,937 units in the corresponding month last year. Toyota Kirloskar Motor, which started exports from April this year, sold 1,693 units in May in South Africa, SIAM said. Ford Indias sales in overseas locations, however, dipped 15. 81% to 1,693 units from 2,011 units in May 2011. Homegrown auto major Tata Motors exports rose by 32. 38% to 372 units from 281 units in the year-ago period. Exports of all categories of vehicles from India during May 2012 increased by 4.62% to 2,46,314 units from 2,35,429 units in the same month last year, SIAM said . The two-wheeler segment witnessed exports of 1,74,362 units in last month compared to 1,61,346 units in the year-ago month, up 8. 07%, it added. The motorcycle segments overseas sales went up by 5. 16% to 1,63,446 units from 1,55,419 units in May 2011. SIAM said exports of scooters from India increased by 87. 18% last month to 10,660 units from 5,695 units in the same month last year. However, exports of commercial vehicles decreased by 8. 72% to 7,861 units in May 2012 from 8,612 units in the corresponding month last year, it added.MARKET CHARACTERISTICS * MARKET SIZE The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USD $35. 8 billion, (INR 165,000 crores) and an investment of USD 10. 9 billion. The industry has provided direct and indirect employment to 13. 1 million people. Automobile industry is flowingly contributing about 5% of the total GDP of India. Indias current GDP is about $1. 4 trillion and is expected to grow to $3. 75 trillion by 2020.The proj ected size in 2016 of the Indian automotive industry varies between $122 billion and $159 billion including USD 35 billion in exports. This translates into a character of 10% to 11% towards Indias GDP by 2016, which is more than take over the current contribution. * DEMAND DETERMINANTS Interest rate (%) cuts unlikely to spur demand Determinants of demand for this industry include vehicle prices (which are determined largely by wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle (mainly determined by the price of petrol), income, interest rates, scrapping rates, and product innovation.Exchange Rate Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption. Affordability Movement in income determine the affordability of new motor vehicles. Allowing unrestricted outside(prenominal) Direct Investment (FDI) led to increase in competition in the domestic marke t hence, making better vehicles available at affordable prices. Innovation Product Innovation is an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars.Demographics It is evident that high nation of India has been one of the major reasons for large size of automobile industry in India. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars. Also, increase in people with lesser dependency on traditional single family income structure is likely to add value to vehicle demand. Infrastructure Longer-term determinants of demand include development in Indians infrastructure.Indias banking giant State Bank of India and Australias Macquarie Group has launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair it s infrastructure such as ports, roads, and power units. These investments have been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. (Source Silicon India) Price of Petrol Movement in oil prices also have an impact on demand for large cars in India.During periods of high fuel cost as experienced from 2007, demand for large cars declined in favors of smaller, more fuel-efficient vehicles. The changing patterns in customer preferences for smaller, more fuel-efficient vehicles led to the launch of Tata Motors Nano one of the worlds smallest and cheapest cars. Surprisingly, when overall passenger car sales have run into problems, the sales of luxury cars and SUVs, which are significantly more expensive in India than abroad due to high import taxes, have experienced encouraging growth.The Indian unit of BMW had to raise capacity at its milling machinery four times during 2011, while sales of the high-end Jaguar Land Rover model owned by T ata Motors rose impressively during a period when more affordable passenger car sales were experiencing a downturn. * INTERNATIONAL MARKETS ANALYSIS The Indian automotive industry embarked a new journey in 1991 with de-licensing of the sector and subsequent opening up for 100% foreign direct investment (FDI). Since then almost all global majors have set up their facilities in Indian taking the level of production from 2 million in 1991 to over 10 million in recent years.The exports in automotive sector have grown on an average compound annual growth rate of 30% per year for the last seven years. The export dinero from this sector are over USD 6 billion. Even with this rapid growth, the Indian automotive industrys contribution in global terms is very low. This is evident from the fact that even though passenger and commercial vehicles have crossed the production figures of 2. 3 million in the year 2008, yet Indias share is about 3. 28% of world production of 70.53 million passenger and commercial vehicles. Indias automotive exports constitute only about 0. 3% of global automotive trade. * LIFE CYCLE The life cycle stage is growth. The market for manufacturing motor vehicles is consistently increasing. The products manufactured by this industry are profitable. Companies have been consistently opening new plats and employing over the past five years. Japanese and European manufacturers of motor vehicles have entered the market. Industry value added has been rising, along with the rise in GDP.Life Cycle Analysis General improvement in availability of trained manpower and good infrastructure is indispensable for sustainable growth of the industry. guardianship this in view, the Indian Government has launched a unique initiative of National Automotive Testing and R&D Infrastructure Project (NATRIP) to provide specialized facilities for Testing, credentials and Homologation to the industry. A similar initiative is required for creating specialised institutions i n automotive sector for education, training and development.The auto industry has grown in the clusters of interconnected companies which are linked by commonalities and complementarities. The major clusters are in and around Manesar in North, Pune in West, Chennai in South, Jamshedpur-Kolkata in East and Indore in Central India. The Government is planning to create a National Level Specialises Education and schooling Institute for Automotive Sector and to enhance the transportation, communication and export infrastructure facilities.The contribution of automotive sector in the GDP of India is expected to double by 2016 through major spotlight on export of small cars, Multi-Utility Vehicles, Two- and Three-wheelers. * INDUSTRY assistant The automobile industry has a defined its target in the Automotive Mission Plan as To emerge as the destination of choice in the world for design and manufacture of automobiles with output reaching a level of USD 145 billion accounting more than 10 % of GDP and providing additional employment to 25 million people by 2016. In order to achieve this plan interventions are required from both Industry and Indian Government.The Indian Government would play a key enabling role in facilitating infrastructure creation, promote the countrys capabilities, create a favorable and predictable business environment, attract investment and promote research & development. The role of Industry will primarily be in designing and manufacturing products of world-class quality standards, establishing cost competitiveness, improving productivity of both labor and capital, achieving scale and R&D enhancing capability and showcasing Indias products in potential markets.In order to achieve these goals the following key recommendations have been made in the Automotive Mission Plan to the Indian Government and Industry Manufacturing and export of small cars, multi-utility vehicles, two- and three-wheelers, tractors, components to be promoted. Care to be i nterpreted of negative like and rules of the country with current negotiation of Free Trade Agreement and Regional Trade agreement with countries like Thailand, Singapore, Malaysia, China, Korea, Egypt, Gulf etc. hypnotic Tariff Policy which may follow attractive investment. Specific measures will be taken for expansion of domestic market.Incremental investment of USD 35 to 40 billion to Automotive Industry during the next 10 years. National Road Safety Board to act as the coordinating body for promoting safety. Inspection and Certification system to be strengthened by encouraging public-private partnership. National level Automotive Institute for training on automobile at International Training Institutes (ITIs) and Automotive Training Institute (ATIs) to be set up. An Auto Design Centre to be established at National Institute of Design, Ahmadabad. National Automotive Testing and R&D Implementation Project (NATRIP) to act as Centre of Excellence for Technical Design Data.Integrati on of Information Technology in manufacturing to be promoted. R&D for product, process and technology to be incentivized. Road Map for Auto Fuel Policy beyond 2010 would be drawn. The profitability of motor vehicle manufacturers has been rising over the past five years, mainly due to rising demand and growth of Indian middle class. Major players of the industry, like Maruti Suzuki India and Tata Motors have been recording profits of 6% to 11% from the past five years. Whereas, earlier profit margins in the industry were only 1. 5% to 3%.Cost of material has bring down from over 85% in the year 2001-2002 to under 80% in the year2008-2009. Wages and salary as a percentage of revenue has been declining and with the increasing labor productivity this is expected to decline further in the coming years. * CAPITAL AND LABOR INTENSITY The level of Capital Intensity is high. The level of labor intensity is medium. The motor vehicle manufacturing industry requires significant level of capita l investment. Value is added through the automated manufacturing and assembly of costly components. Labor input is required in the manufacturing, assembly, and finishing processes.In order to achieve and retain competitiveness, vehicle manufacturing industry depends on its capacity and speed to innovate and upgrade. The most imperative indices for competitiveness in the industry are productivity in both labor and capital. * TECHNOLOGY AND SYSTEMS The level of technology change is high. The rate of change in technology is medium. Investment in technology by producers has been on the rise. The automobile industry in India has seen an enormous development in the engines which are being used. Carburetor engines have become obsolete and Multi Point Fuel Injection (MPFI) engines are the order of the days in patrol cars.The Diesel engines have also undergone a sea change from the time Rudolf Diesel invented it way back in the 1892. Today Common Rail Direct Injection (CRDI) is the order of the day. Multi Point Fuel injection (MPFI)The fuel injects were used to meet stricter emission norms as it keeps pollutants to bare minimum and drives the maximum performance out of a vehicle by squeezing out the maximum mileage even from the last drop of fuel that goes into the engine. MPFI system injects fuel into individual cylinders after receiving command from the on board engine management system computer or Engine Control Unit (ECU).This technology results in superior fuel combustion, better fuel management, engine performance and reduced pollution. To get the maximum out from these types of engine one should use Premium petrol like XTRA Premium, Speed, and Power. Common Rail Direct Injection (CRDI) CRDI engine cars offer 25% more power than the normal direct injection engine with a superior pickup and torque, offering sometimes up to 70% more power than the conventional diesel engines. They are smooth, less strident, and immensely.