An Empirical Analysis of the Growth Patterns of the Automobile Industry in India

Background: Since the introduction of the LPG economy in 1991, the automobile industry in India has progressed rapidly, and a large number of global auto manufacturers have established manufacturing facilities in India; however, the Indian industry lags behind that of many other countries. Therefore, a comprehensive framework is required for the growth and development of the industry.

Purpose: This paper attempts to study the growth of the automobile industry in India over the selected period. The study also makes projections of various growth parameters of the industry based on an analysis of past trends.

Methods: This study examines secondary data collected from the Society of Indian Automobile Manufacturers’ (SIAM) website spanning 19 years, from 2003-04 to 2020-21. The data were characterized using various descriptive statistical measures, including mean, standard deviation, coefficient of variation, and extreme values. An exponential growth rate was determined to examine the industry expansion. Subsequently, growth forecasts were developed for the selected parameters by employing trend equations.

Results: The study finds that annual production, domestic sales, and exports of the industry showed an increasing trend until the outbreak of coronavirus in 2019. Subsequently, a sudden decrease was observed in the production, sales, and exports of automobiles from India. The research revealed that the passenger vehicle sector experienced the most significant increase in production and sales within the industry during the timeframe examined. The two-wheeler sector demonstrated the highest growth rate in vehicle exports during the study period.

Conclusion: The implementation of the Bharat stage VI standards and the outbreak of COVID-19 will have a significant impact on the industry. The industry is negatively affected by the pandemic. However, the extent to which the loss will occur and how the industry will recover from it can be determined in the long run. The study proposed that the government should develop a detailed roadmap to help the industry navigate the challenges posed by the COVID-19 pandemic more effectively. In addition, it recommends that the Indian automotive sector prioritize self-sufficiency in manufacturing advanced and environmentally friendly vehicles.