Business

1. Over the last 25yrs ever since Maruti Suzuki rolled out its first model, there has been a dramatic shift in consumer perception, demand and expectations. This coupled with rising per capita income and lower interest rates have led to more and more people affording cars which once were a luxury. Besides, consumers today do not hesitate demanding more value for their money spent leading to increased competition across segments, the small car or the B+ segment witnessing maximum shift. Today the automobile industry caters to a broader mass right from a poor farmer in a Tier-3 town (Tata Nano, Maruti 800) to a young executive in a metro city. Thus every company across the globe including major automobile giants such as GM, Ford, and many more are offering one model or the other at every price point. The depth and the breadth of the market is likely to only increase in the years to come and therefore one can expect this competition and shift to continue.

With the above study, it is safe to say that competition in this industry is high and it is increasing. Research and development investment is needed for innovations which is the lifeline for achieving and retaining competitiveness in the industry. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. The most important indices of competitiveness are productivity of both labour and capital.

The concept of attaining competitiveness on the basis of low cost and abundant labour, favourable exchange rates, low interest rates and concessional duty structure is becoming inadequate and therefore, not sustainable. A greater emphasis is required on the development of the factors like innovation which can ensure competitiveness on a long-term basis.

India with a rapidly growing middle class (450 million in 2007 as per NCAER Report), market oriented stable economy, availability of trained manpower at competitive cost, fairly well-developed credit and financing...