In India, automobile industry is amongst the largest and most rapidly growing sectors. The industry consists of five segments - commercial vehicles, multi-utility vehicles and passenger cars, two-wheelers, three-wheelers and tractors. Pallavi Majha brings out the factors driving the industry and checks out the various models of two wheelers and passenger cars available in the market

Over the years, the concept of 'retail' has undergone a complete makeover owing to a number of factors like increased incomes, affordable prices of merchandises, lucrative financing packages, growing openness and organised retail. Automobile industry is one of the largest and most rapidly growing industries in India. The Indian automobile industry has grown at an impressive rate of 16.82 per cent over the last year with total sales of vehicles reaching around one crore (till November 2006 against 85 lakh in 2005). The Indian automobile industry is in top gear and key drivers giving a turbo growth to the sector are floating economy, higher replacement demand, better market penetration, tough competition leading to better services and products, rising exports, rise in rural income and easy loans. As per the Society of Indian Automobile Manufacturers (SIAM) report, the automobile industry, in the first quarter of FY2007-08, witnessed negative growth in almost all the categories. However, passenger vehicles, scooters and the light commercial vehicles have shown growth.

Industry evolution and changing consumer behaviour
India started implementing its developmental plans after gaining independence in 1947. At that time, a few firms were allowed to borrow technology to manufacture automobiles. Only after 1983, technology started flowing freely into the Indian automobile industry from various parts of the world. High growth rate of Indian economy has made many foreign car manufacturers enter the Indian market. In 1980s, only a handful of cars were seen in the Indian market. Most of these were outdated models like Hindustan Motors' Ambassador (which is still produced and sold). The only car with modern technology was Maruti 800, which became very popular because of low price, high fuel efficiency and good reliability. Since then, the market has grown with over 20 manufacturers producing hundreds of models and variants. Mr Arvind Saxena, VP (Marketing & Sales), Hyundai Motor India Ltd, says, “Initially, the Indian automobile market was dominated by mini and compact cars with sales growing at 17 percent a year but, at present, the growth rate of the compact and mid-size cars is also on the rise. This is precisely because of the growth in the disposable income as well as the growing aspiration of an average Indian. Easy availability of finance has also prompted people to directly enter the C segment.” The Indian auto industry has matured much. Tata Motors developed indigenously the Tata Indica model. Indian manufacturer, Mahindra & Mahindra, also came up with its own SUVs, the Scorpio and the Bolero. Agreeing to the fact that consumer behaviour has changed over the years, Ms Soni Shrivastav, GM, corporate communication, Hindustan Motors Ltd, says, “This can be attributed to better incomes, willingness to experiment, trying to have luxurious vehicles and better finance facilities.”