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72
CHAPTER – III
Analysis of Production and Sales Trend of
Indian Automobile Industry
Analysis of production trend
Production is the activity of making tangible goods. In the economic
sense production means both making goods and rendering services that add
value to a product even though no physical change has taken place1. It covers
all the activities of procurement, all action and utilization of resources such as
materials, labour, energy, machinery etc., Production is one of the most
important areas of performance. In business enterprises, production function
will be considered to be very effective and useful because it must operate
primarily to satisfy customer’s demand and it must permit production
activities to operate in an economical and efficient manner2.
Production may be considered as the backbone of the manufacturing
business enterprises. The production data of a company may give an idea as to
how the company has performed as compared to other companies of the same
industry. The production performance of an enterprise can be measured in a
number of ways. Production performance of the industry as a whole can be
compared with different years; also the comparison can be done in between
the competitive industries. For appraising the production performance of
individual companies, production in different years can be compared and inter
company comparison between companies under study may be more
meaningful for this purpose. The analysis of capacity utilization can also
significantly prove that production performance of a company or of the
1. S.A Sherlekar, Industrial Organization and Management (Bombay: Himalya Publishing
Honee, 1998), P. 375.
2. A. Aziz, performance Appraisal-Accounting and Quantitative Approaches (Jaipur: pointer
publishers, 2003), P. 22.
73
industries as a whole. All these techniques have been adopted to appraise the
production performance of the automobile industry in the present chapter.
An attempt has also been made to estimate trend co-efficients for
production of automobiles in India during the study period by fitting a linear
regression model. The linear model fitted is as follows
P = + t + e
Where P is rate of production, t is the time and and are the
parameters [intercept and co-efficient respectively] and e is the error term. To
test whether the difference between actual production and estimated
production was significant or not, the following hypothesis is framed and
tested.
Ho - There is no significant difference between actual
production and the trend values of production among
different years.
(or)
Ha - There is significant difference between actual
production and the trend values of production among
different years.
The automobile industry makes more range of products such as
commercial vehicles, passenger cars and multiutility vehicles, three wheelers
and two wheelers. Table 3.1 shows the annual production of automobiles in
India from the year 1995-96 to 2005-06. The variations of production of
various products have also been computed taking the production data of 1995-
1996 as the base 100. Further, product-wise dispersion in production of Indian
automobile industry over the study period is achieved through estimation of
mean, co-efficient of variation and compound annual growth rate. The
estimates are presented in Table 3.1.
74
Table 3.1
Annual production of automobile in India
(1995-96 to 2005-06)
(In thousands)
Years Commercial
Vehicles
Passenger Cars and
Multiutility Vehicles
Two and Three
Wheelers
1995-96 (100)
256.60
(100)
414.90
(100)
1107.99
1996-97 (117)
300.60
(119)
493.70
(228)
2522.70
1997-98 (89)
229.00
(116)
480.60
(238)
2640.40
1998-99 (53)
135.80
(122)
505.50
(263)
2911.30
1999-00 (71)
181.60
(168)
698.20
(294)
3259.00
2000-01 (59)
151.90
(151)
626.70
(295)
3266.70
2001-02 (62)
159.00
(148)
614.30
(366)
4056.50
2002-03 (82)
210.60
(173)
718.80
(455)
5035.90
2003-04 (110)
281.90
(177)
736.00
(453)
5013.80
2004-05 (133)
341.50
(240)
994.20
(578)
6403.70
2005-06 (148)
378.80
(276)
1144.50
(596)
6605.80
Mean 238.85 675.22 3893.07
CV 0.34 0.33 0.44
CAGR 4.00 10.69 19.54
Figures in brackets are indices
Source: CMIE Database
75
Table 3.2
Estimates of trend co-efficient for production of automobile
in India (1995 -96 to 2005 -06)
S.No Type P = + t + e
R2
F value
1. Commercial Vehicles 181.01
(3.59)
9.64
(1.29) 0.16 1.68
2. Passenger Cars and
Multiutility Vehicles
306.55
(4.84)
61.44
(6.58)* 0.82 43.31
3. Two and three wheelers 883.26
(3.31)
501.63
(12.74)* 0.94 162.53
* - significant at 5 percent level;
Source: computed
Table 3.3
Projections for production of automobile in India
(in thousands)
Years Commercial Vehicles Passenger Cars and
Multiutility Vehicles
Two and Three
Wheelers
2009-10 325.60 1228.15 8407.71
2010-11 335.25 1289.59 8909.34
2011-12 344.89 1351.03 9410.97
2012-13 354.53 1412.47 9912.60
2013-14 364.17 1473.91 10414.23
Source: Computed
76
77
Commercial Vehicles
The production of commercial vehicle for the period of study has been
shown in Table 3.1. The production of commercial vehicle mark fluctuating
trend through out the study period. In the year 1995-96, the production was
256.60 thousands which increased in 1996-97 but gradually decreased. In the
last four years the production increased continuously and it reached 378.80
thousands in 2005-06. The compound annual growth rate of production of
commercial vehicles was positive which worked out as 4 per cent during the
study period. The co-efficient of variation (0.34) indicates that the production
of commercial vehicles moderately fluctuated during the study period.
The results of estimates of trends co-efficients for production of
commercial vehicles are presented in Table 3.2.
Passenger Cars and Multiutility Vehicles
The annual production of passenger cars and multiutility vehicles has
been shown in Table 3.1. The production of passenger cars and multiuitlity
vehicles showed a fluctuating trend during the study period. The production
was 414.90 thousand in 1995-96 which decreased after an increase to 493.70
in 1996-97. In 1997-98 the production process started increasing sharply for
all years during the study period. It increased to 276 per cent in 2005-06 in the
indices. But there was a sharp increase between 2003-04, 2004-05 and 2005-
06.The mean values of production of passenger cars and multiutility vehicles
were 675.22 thousands during the study period. The compound annual growth
rate is positive and the CV value (0.33) indicates that the production of
passenger cars and multiutility vehicles moderately fluctuated during the
study period.
The results of estimates of trend co-efficient for production of
passenger cars and multiutility vehicles are presented in Table 3.2.
78
Two and Three Wheelers
It is evident from the Table 3.1 that the production of three wheelers
and two wheelers showed a fluctuating trend throughout the study period. It
was 1107.99 thousands in 1995-96 which increased very sharply till 2002-03
tremendously. But in the next year 2003-04 it declined to 5013.80 thousands.
In the next two years it increased rapidly to 6605.80. The CV value
experienced highly fluctuating variation. The compound annual growth rate of
two and three wheelers was positive during the study period.
The results of estimates of trend co-efficient for production of two and
three wheelers are presented in Table .3.2.
Production of automobiles in India-Projections
The projections obtained for production of commercial vehicles,
passenger cars and multiutility vehicles and two and three wheelers by linear
model growth is listed in Table 3.3. It shows that the two and three wheelers
have growing good market potential. Table 3.3 indicates that the commercial
vehicles and passenger cars and multiutility vehicles are growing marginally.
The table shows that the two and three wheelers are preferred over others.
From the above analysis the linear model of time trend of production
has proved to be “good fit” in case of passenger cars and multiutility vehicles
and two and three wheelers. This is revealed from the value of R2, the co-
efficient of determination. The R2 value of commercial vehicles was 0.16,
such great variation in the value of R2 implies that time explain production
variation of Indian automobiles in different degree over the time. The values
of was positive and hence it is statistically significant.
79
Table 3.4
Annual production of selected automobile industry in India
Industry Range
(in thousands)
Mean
(in thousands) CV CAGR
Commercial Vehicles
Ashok Leyland Ltd 26.50 - 56.62 39.68 0.24 4.07
Tata Motors Ltd 129.32 - 423.45 236.55 0.41 8.83
Eicher Motor Ltd 5.19 - 44.76 16.02 0.92 20.58
Swaraj Mazda Ltd 2.88 - 14.56 6.82 0.58 12.47
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 15.86 - 37.86 25.25 0.24 -3.64
Mahindra and Mahindra Ltd 63.15 - 141.12 88.48 0.30 8.01
Maruthi Udyog Ltd 277.78 - 562.75 394.76 0.22 7.28
Daewoo Motors India Ltd 5.15 - 35.54 14.72 0.83 -1.96
Two and Three Wheelers
Bajaj Auto Ltd
1212.76
-
1723.82
1416.30
0.11
2.56
Maharastra Scooters Ltd 17.90 - 154.36 88.15 0.65 -14.45
TVS Motors India Ltd 442.81 - 1322.81 890.80 0.33 11.58
Hero Honda Motors Ltd 230.08 - 2322.65 1168.36 0.68 26.01
Source: Computed from the annual reports of the selected Industry
80
Table 3.5
Estimates of trend co-efficient for production of selected
automobile industry in India (1995 -96 to 2005 -06)
Industry P = + t + e
R2
F value
Commercial Vehicles
Ashok Leyland Ltd 29.88
(5.49)
1.63
(2.03)* 0.32 4.14
Tata Motors Ltd 97.15
(2.43)
23.23
(3.94)* 0.63 15.55
Eicher Motor Ltd -5.81
(-.99)
3.64
(4.22)* 0.66 17.79
Swaraj Mazda Ltd 0.40
(0.34)
1.07
(6.11)* 0.81 37.27
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 32.78
(10.64)
-1.26
(-2.76) 0.46 7.63
Mahindra and Mahindra Ltd 50.94
(4.46)
6.26
(3.72)* 0.61 13.80
Maruthi Udyog Ltd 257.20
(8.50)
22.93
(5.14)* 0.75 26.44
Daewoo Motors India Ltd 17.25
(1.84)
-0.51
(0.31) 0.01 0.09
Two and Three Wheelers
Bajaj Auto Ltd 1224.01
(15.49)
32.04
(2.75)* 0.46 7.56
Maharastra Scooter Ltd 182.92
(11.10)
-15.80
(-6.50) 0.82 42.26
TVS Motors India Ltd 365.44
(11.90)
87.56
(19.33)* 0.98 373.76
Hero Honda Motors Ltd -239.64
(-2.66)
234.67
(17.65)* 0.97 311.58
* Significant at 5 percent level
Source: computed.
81
Dispersions in production of Indian Automobile Industry
This section of the chapter intends to examine company wise
dispersion, in production of Indian automobile industry over the study period
of 11 years. This is achieved through estimation of mean, co-efficient of
variation and compound annual growth rate. Further estimates of trend co-
efficient for production of selected automobile industry have been computed.
The estimates are presented in Table 3.4 and Table 3.5. The annual
production of selected automobile industry during the study period has been
shown in Appendix I.
It is observed from Table 3.4 that under commercial vehicles sector,
Tata Motors Ltd had highest mean followed by Ashok Leyland Ltd and
Eicher Motors Ltd. Another important observation which follows from Table
3.4 is that mean production of commercial vehicles varies greatly in case of
all the industries under commercial vehicles sector. From the CV value, all
the industries experienced highly fluctuating variation. The compound annual
growth rate of commercial vehicles by all the selected industries was positive
during the study period and was highest in Eicher Motors Ltd.
It is clear from that Table 3.5 that in commercial vehicles the F value
was highest in Swaraj Mazda Ltd (37.27) followed by Eicher Motors Ltd and
Tata Motors Ltd and was least in Ashok Leyland Ltd. The linear model of
time trend of production has proved to be good fit in case of four industries.
This is revealed from the value of R2, the co-efficient of determination. The
great variation is value of R2 implies that time explain production variation of
different industries under commercial vehicles sector was indifferent over the
study period.
82
In passenger cars and multiutility vehicles sector, the F value was
highest in case of Maruthi Udyog Ltd followed by Mahindra and Mahindra
Ltd and Hindustan Motors Ltd. Further, the linear model of time trend is good
in case of Maruthi Udyog Ltd and Mahindra and Mahindra Ltd as the value of
R2 indicates that time explain production variation of these two industries
vary from 75 per cent and 61 per cent during the study period.
Under two and three wheelers sectors, the linear model of time trend of
production has proved to be good fit in TVS Motors India Ltd and Hero
Honda Motors Ltd as the value R2 indicates that time explain production
variation of these two industry vary to the tone of 98 and 97 per cent during
the study period.
Capacity utilisation of automobile industry
In developing economy, the need for optimum utilisation of industrial
capacity can hardly be over-emphasised. Production below the capacity in
industrial plant is the source of a significant loss in the growth of Gross
National Product of a country. The production performance of a business
enterprise can be appraised on the basis of capacity utilisation. Full utilisation
of the installed capacity is the dominant desideratum in judging the
operational efficiency of the business enterprise. “Through better utilisation of
installed capacity, the economy should improve the capital output and capital
labour ratios and should consequently result in more employment, more
income and more competitiveness in export market without additional capital
investment3.”
Capacity utilisation means the proportion of the total capacity which
has been gainfully utilised for the production of required goods and services4.
3. NC Joshi, Management-concept and Analysis, P-50
4. Ibid, P.51
83
Table 3.6
Capacity utilisation in automobile industry in India
(1995 -96 to 2005 -06)
Years
Commercial Vehicles Passenger Cars and
Multiutility Vehicles
Two and three
Wheelers
Installed
capacity
(000)
Capacity
utilisation
(%)
Installed
capacity
(000)
Capacity
utilisation
(%)
Installed
capacity
(000)
Capacity
utilisation
(%)
1995-96 332.66 69.56 475.60 51.06 3779.08 55.66
1996-97 391.16 47.64 514.84 52.07 4416.18 55.34
1997-98 409.16 33.81 526.84 44.54 4724.68 58.41
1998-99 452.00 29.29 824.84 34.75 5339.68 59.43
1999-00 467.00 48.30 779.00 60.48 5789.18 49.37
2000-01 471.00 41.07 749.00 57.12 6372.88 46.84
2001-02 468.00 54.20 783.80 50.80 10487.70 43.84
2002-03 453.00 68.82 693.80 65.61 10143.57 49.25
2003-04 460.50 92.62 556.00 76.74 7483.50 58.01
2004-05 482.60 95.50 623.00 82.14 9823.20 62.03
2005-06 505.80 96.88 794.00 91.43 10120.40 73.41
Mean 60.53 60.61 55.60
CV 0.41 0.28 0.15
CAGR 3.35 5.99 2.82
Source: CMIE Database.
84
It also refers to the relationship between production and installed capacity.
The relationship has been calculated by dividing figure of production by
figure of installed capacity in terms of percentages5. The overall performance
of manufacturing business enterprise, to a great extent, depends upon its the
utilisation of production capacity, it also indirectly helps in exploring the
production performance. The production performance ultimately depends on
foreign market and finally contributing to Gross National Product6.
The automobile Industry in India produces a large variety of products.
The installed capacity and capacity utilisation ratio of different products of
automobile industry during the study period is presented in Table 3.6.
The capacity utilisation ratio of commercial vehicles marked a
fluctuating trend during the study period. It varied in range of 67.59 per cent
from 29.29 per cent in 1998-99 to 96.88 per cent in 2005-06. The CV value
came to 0.41, whereas average capacity utilisation ratio remained 60.53
during the study period. The capacity utilisation ratio of passenger cars and
multiutility vehicles also showed fluctuating trend. It varied from 34.75 per
cent in 1995-96 to 91.43 per cent in 2005-06 indicating the range of 56.68 per
cent. The CV has 0.28 with a mean of 60.61 during the study period. The two
and three wheelers sector revealed a fluctuating trend during the study period.
It varied in range 29.57 per cent from 43.84 per cent in 2001-02 to 73.41 per
cent in 2005-06. The co-efficient variation being 0.15 and the mean being
55.60 during the study period. It is, therefore, obvious that the Indian
Automobile Industry has not utilised its plan capacity effectively. It is,
therefore, suggested that the management should concentrate on overcoming
the problem of power cuts, implementing research programs, adopting new
techniques, etc.
5. A.N. Agarwal, Corporate performance evaluation (Jaipur: Pointer Publisher, 1991), P. 66
6. A. Aziz, opp.cite., P. 36.
85
Table 3.7
Capacity utilisation of selected automobile industry
(Production as percentage of installed capacity)
(1995 -96to 2005 -06)
Industry Range (%) Mean
(%) CV
CAGR
(%)
Commercial Vehicles
Ashok Leyland Ltd 52.50 - 113.26 78.54 0.24 3.35
Tata Motors Ltd 16.57 - 48.24 32.15 0.35 1.84
Eicher Motor Ltd 43.25 - 106.75 100.71 0.95 0.58
Swaraj Mazda Ltd 57.60 - 196.92 114.85 0.43 8.15
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 24.78 - 61.09 40.64 0.27 -3.64
Mahindra and Mahindra Ltd 47.09 - 93.94 67.97 0.22 1.32
Maruthi Udyog Ltd 94.40 - 194.94 125.37 0.25 6.11
Daewoo Motors India Ltd 6.21 - 46.26 18.40 0.72 13.67
Two and Three Wheelers
Bajaj Auto Ltd 11.51 - 86.23 41.31 0.58 6.57
Maharastra Scooter Ltd 11.93 - 102.91 60.89 0.64 -14.05
TVS Motors India Ltd 52.10 - 97.83 71.62 0.17 6.52
Hero Honda Motors Ltd 59.88 - 98.29 86.56 0.12 0.30
Source: Computed
86
Dispersion on capacity utilisation ratio of selected automobile industry
This section of the chapter intends to examine industries wise capacity
utilisation ratio of Indian automobile industry over the study period. This is
achieved through estimation of mean, co-efficient of variation and compound
annual growth rate. The estimates are presented in Table 3.7. The individual
capacity utilisation ratio of selected automobile industry during the study
period has been shown in Appendix II.
It is observed from the Table 3.7 that under commercial vehicles
sector on an average Swaraj Mazda Ltd has the highest per cent (114.85 per
cent) followed by Eicher Motors Ltd (100.71 per cent) and Ashok Leyland
Ltd (78.54 per cent) during the study period. Ashok Leyland Ltd had the
lowest CV value of 0.24 whereas Eicher Motors Ltd has the highest during
the study period. The compound annual growth rate of all industries was
positive in this sector. It is also observed from the Appendix II that the
capacity utilisation ratio of Swaraj Mazda Ltd 100 per cent from 2000-01 to
2003-04.
Among the selected passenger cars and multiutility vehicles, Maruthi
Udyog Ltd had the highest mean capacity of 125.37 per cent followed by
Mahindra and Mahindra Ltd (67.97 per cent) and Hindustan Motors Ltd
(40.64 per cent). The analysis of co-efficient of variation reveals that
Mahindra and Mahindra Ltd had the least (CV = 0.22), while Daewoo Motors
India Ltd had the highest CV value during the study period. The compound
annual growth rate was positive in all industries except Hindustan Motors Ltd
during the study period.
The mean capacity ratio was the highest in Hero Honda Motors Ltd
(86.56 per cent) followed by TVS Motors India Ltd (71.62 per cent) and
Maharastra Scooters India Ltd (60.89 per cent) during the study period. The
87
CV value was the lowest in Hero Honda Motors Ltd (0.12) while the highest
was in Bajaj Auto Ltd (0.58) during the study period. The compound annual
growth rate was positive in all cases except Maharastra Scooters India Ltd
during the study period.
To conclude, the mean rates of capacity utilisation varied in all
industries irrespective of the sector of which they belong.
Analysis of sales trend
‘Sales’ is the value of the output offered to the customers. It is the life
blood of a business enterprise without which the business cannot survive.
Further, ‘sales’ is the indicator of the operational efficiency of management in
how efficiently the management has used the assets of the business. The
higher the volume of sales, the more efficient the management. Sales is also
related to profitability of an enterprise. If other things remain constant, the
higher the amount of sales, the more profitable of the business is and vice-
versa. The trend of sales indicates the direction in which forecast for further
can be made. The trend analysis of sales helps to understand the growth of a
business enterprise. For proper trend analysis, the trend should be studied at
least over a period of five or more years7.
The sales performance of an enterprise can be measured in a number of
ways. The sales performance of the industry as a whole can be compared with
different years; also the comparison can be done in between the competitive
industries. The analysis of market share can also significantly prove the sales
performance of a company or of the industry as a whole. All these techniques
have been adopted to appraise the sales performance of the Indian automobile
industry in the present section.
7. Sanjaey J. Bhayani, A study on sales trend and cost structure of Indian Cement Industry,
The Management Accountant, Jan 2006, Vol.41, No.1, PP 66-72.
88
An attempt has also been made to estimate trend co-efficient for sales
of automobiles in India during the study period by fitting a linear regression
model. The linear model fitted is as follows
P = + t + e
Where P is rate of sales, t’s the time and and are the parameters
[intercept and co-efficient respectively] and e is the error term. To test
whether the difference between actual sales and estimated sales was
significant or not, the following hypothesis is framed and tested.
Ho - There is no significant difference between actual sales and
the trend values of sales among different years.
(or)
Ha - There is significant difference between actual sales and trend
values of sales among different years.
The annual sales quantity of automobiles products such as commercial
vehicles, passenger cars and multiutility vehicles and two and three wheelers
from 1995-96 to 2005-06 are presented in Table 3.8. To study the trend of
sales in automobile industry during the study period, the year 1995-96 is
taken as the base year and figure of sales in the base year have been taken
equal to 100. Index numbers have been calculated for the remaining year
based on the amount of sales for the base year. Further, the product wise
dispersion in sales of Indian Automobile Industry over the study period is
achieved through estimation of mean, co-efficient of variation and compound
annual growth rate. The estimates are also presented in Table 3.8.
89
Table 3.8
Annual sales units of automobile in India
(In thousands)
Years Commercial
Vehicles
Passenger Cars and
Multiutility Vehicles
Two and Three
Wheelers
1995-96 (100)
248.23
(100)
398.03
(100)
2724.54
1996-97 (92)
228.71
(129)
511.88
(112)
3053.34
1997-98 (61)
150.44
(126)
503.12
(120)
3265.39
1998-99 (54)
134.60
(125)
496.10
(137)
3729.51
1999-00 (66)
165.05
(166)
661.33
(141)
3828.99
2000-01 (58)
144.29
(161)
641.31
(141)
3829.33
2001-02 (53)
130.62
(159)
633.15
(156)
4250.50
2002-03 (75)
185.84
(173)
689.52
(167)
4543.27
2003-04 (109)
271.43
(184)
730.91
(207)
5635.90
2004-05 (124)
308.42
(192)
763.02
(228)
6215.24
2005-06 (145)
360.50
(206)
821.50
(251)
6825.62
Mean 211.65 622.80 4363.78
CV 0.37 0.21 0.31
CAGR 3.79 7.49 9.60
Figure in brackets are Indices
Source: CMIE Database
90
Table 3.9
Estimates of trend co-efficient for sales units of automobile in India
(1995 -96to 2005 -06)
S.No Type P = + t + e
R2
F value
1. Commercial Vehicles 140.51
(3.07)
11.92
(1.77) 0.25 3.14
2. Passenger Cars and
Multiutility Vehicles
395.59
(16.22)
37.85
(10.53)* 0.93 110.86
3. Two and Three Wheelers 2046.68
(7.86)
384.67
(10.02)* 0.92 100.40
* - significant of 5 percent level
Source: Completed
Table 3.10
Projections for sales units of automobile in India
(In thousands)
Years Commercial
Vehicles
Passenger Cars
and Multiutility
Vehicles
Two and Three
Wheelers
2009-10 318.95 963.34 7816.73
2010-11 330.87 1001.19 8201.40
2011-12 342.79 1039.04 8586.87
2012-13 354.71 1076.89 8970.74
2013-14 366.63 1114.74 9355.41
Source: Completed
91
92
Commercial Vehicles
The annual sales of commercial vehicles for the period of study has
been shown in Table 3.8. The sales of commercial vehicles marked
fluctuating trend throughout the study period. In the year 1995-96 the sales
was 248.23 thousands which decreased to 134.60 thousands in the next three
years. This was due to increasing prices and decrease in quantity of sales. But
again from 1999-00 a slow increase in quantity of sales occurred. In the last
three years the sales of commercial vehicles increased continuously and
registered 360.50 indices in 2005-06. The analysis of CV value indicates that
the sales of commercial vehicles moderately fluctuated during the study
period.
The results of estimates of trend co-efficient for sales of commercial
vehicles is presented in Table 3.9. The yearly increase in sales of commercial
vehicles comes to 11.92 thousands.
Passenger Cars and Multiutility Vehicles
It is evident from Table 3.8 that the sales trend of passenger cars and
multiutility vehicles registered a rising trend throughout the period of study
except in 1998-99 which showed a declining trend when compared to
previous year. The mean value of sales of passenger cars and multiutility
vehicles is 622.80 thousands during the study period. The analysis of CV
value indicates that sales of passenger cars and multiutility vehicles
moderately fluctuated during the study period.
Table 3.9 shows the linear least square trend of sales of passenger cars
and multiutility vehicles. The yearly increase in sales comes to 37.85
thousands.
93
Two and Three Wheelers
The total sales figures in quantity of two and three wheelers have been
presented in Table 3.8. The table reflects a rising trend in sales of two and
three wheelers over the study period. Only during 1999-2000 and 2000-2001
the sales remained constant. The mean value of sales of two and three
wheelers comes to 4363.78 thousands.
Table 3.9 shows the linear least square trend of sales of two and three
wheelers. The yearly increasing sales come to 384.67 thousands.
Sales of automobiles in India - Projections
The projections obtained for sales of commercial vehicles, passenger
cars and multiutility vehicles and two and three wheelers by linear growth
model have been presented in Table 3.10. It is evident from the Table 3.10
that commercial vehicles, passenger cars and multiutility vehicles were
growing marginally whereas two and three wheelers have fast emerging
growing market in the years to come in our country.
It can be concluded that the linear model of time trend of sales has
proved to be “good fit” in case of passenger cars and multiutility vehicles and
two and three wheelers. This is revealed from the values of R2 which varied
from 0.25 for commercial vehicles, 0.93 for passenger cars and multiutility
vehicles and 0.92 for two and three wheelers. Such a great variation in the
value of R2 implies that time explains sales variation in different degree over
the time. It is concluded that at present sales level of automobiles product is at
a satisfactory level yet there is further scope to increase the level of growth
rate per year regularly.
94
Table 3.11
Annual sales units of selected automobile industry in India
Industry Range
(in thousands) Mean
(in thousands) CV
CAGR
(%)
Commercial Vehicles
Ashok Leyland Ltd 29.68 - 67.82 40.69 0.29 6.11
Tata Motors Ltd 128.86 - 383.73 222.40 0.36 7.80
Eicher Motor Ltd 5.28 - 63.83 20.45 1.10 26.94
Swaraj Mazda Ltd 2.98 - 14.68 18.77 1.26 13.25
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 21.05 - 38.03 25.72 0.24 -3.23
Mahindra and Mahindra Ltd 62.93 - 142.91 89.10 0.29 7.39
Maruthi Udyog Ltd 275.26 - 523.25 383.29 0.21 6.63
Daewoo Motors India Ltd 6.50 - 35.79 16.07 0.68 5.20
Two and Three Wheelers
Bajaj Auto Ltd 1301.97 - 1720.25 1433.00 0.10 2.82
Maharastra Scooters Ltd 16.93 - 152.60 87.86 0.66 -15.76
TVS Motors India Ltd 410.81 - 1426.92 892.85 0.37 13.25
Hero Honda Motors Ltd 230.16 - 2620.42 1205.87 0.71 27.54
Source: Computed
95
Table 3.12
Estimates of trend co-efficient for sales units of selected
automobile industry in India (1995 -96 to 2005 -06)
Industry P = + t + e
R2
F value
Commercial Vehicles
Ashok Leyland Ltd 27.39
(4.42)
2.22
(2.43)* 0.40 5.88
Tata Motors Ltd 109.60
(3.31)
18.80
(3.85)* 0.62 14.80
Eicher Motor Ltd -13.49
(-1.58)
5.66
(4.50)* 0.69 20.21
Swaraj Mazda Ltd 0.284
(0.24)
1.085
(6.32)* 0.82 39.95
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 32.82
(10.08)
-1.18
(-2.46) 0.40 6.07
Mahindra and Mahindra Ltd 50.38
(4.87)
6.45
(4.23)* 0.67 17.92
Maruthi Udyog Ltd 257.50
(10.23)
20.97
(5.65)* 0.78 31.93
Daewoo Motors India Ltd 14.28
(1.69)
0.36
(0.24) 0.01 0.06
Two and Three Wheelers
Bajaj Auto Ltd 1224.03
(18.22)
31.49
(3.13)* 0.52 9.78
Maharastra Scooters Ltd 182.08
(10.79)
-15.70
(-6.31)* 0.82 39.85
TVS Motors India Ltd 308.85
(9.08)
97.33
(19.41)* 0.98 376.59
Hero Honda Motors Ltd -310.08
(-3.04)
252.66
(16.81)* 0.97 282.66
* - Significant at 5 percent level
Source: computed
96
Dispersions in sales of Indian automobile industry
This section of the chapter intends to examine company wise
dispersion in sales of Indian automobiles over the study period. This is
achieved through estimation of mean, co-efficient of variation and compound
annual growth rate which were presented in Table 3.11 and 3.12. The annual
sales of selected automobile industry during the study period is shown in
Appendix III.
It is observed from Table 3.11 that under commercial vehicle sectors
Tata Motors Ltd had the highest mean sales followed by Ashok Leyland Ltd
and Eicher Motors Ltd. The mean sales vary greatly in case of all the
industries under the sector from the CV value, two out of four industries (50
per cent) experienced moderate fluctuating variation in sales during the study
period. The compound annual growth rate of sales of commercial vehicles
was positive during the study period and is highest in Swaraj Mazda Ltd and
Eicher Motors Ltd.
It is clear from Table 3.12 that the linear model at time trend of sales
has proved to be good fit. This is revealed from the value of R2 which implies
that time explain sales variation of different industries under commercial
vehicles sector is in different degrees over the time. It is observed from Table
3.11 that under passenger cars and multiutility vehicles sectors, Maruthi
Udyog Ltd had high mean value followed by Mahindra and Mahindra Ltd and
Hindustan Motors Ltd. It is observed that three out of four industries have
experienced moderately fluctuating variation in sales during the study period.
The analysis of compound annual growth rate of sales is positive in all cases
except Hindustan Motors Ltd. It is highest in Daewoo Motors Ltd followed by
Hindustan Motors Ltd.
97
It is clear that Table 3.12 signifies the linear model at time trend of
sales which is proved to be good-fit in Maruthi Udyog Ltd (383.29 per cent)
and Mahindra and Mahindra Ltd (89.10 per cent) as per the value of R2, co-
efficient of determination. The value of R2 indicates that time explain sales
variation of these two industries are 78 per cent and 67 per cent respectively.
The negative value of in case of Hindustan Motors Ltd implies sales decline
over the study period.
It is observed from Table 3.11 that under two and three wheelers
sectors, the mean value of sales are the highest in case of Bajaj Auto Ltd,
Hero Honda Motors Ltd and TVS Motors India Ltd. The table also reveals
that two out of four industries has showed moderately fluctuating variation in
sales series over the study period. The compound annual growth rate is
negative only in case of Maharastra Scooters Ltd. Among the industries
having positive compound annual growth rate Hero Honda Motors Ltd is the
highest during the study period.
It is observed from Table 3.12 that the linear model of time trend of
sales has proved to be “good fit” in case of TVS Motors Ltd, Hero Honda
Motors Ltd as per R2. The negative value of , the time trend co-efficient
confirms the decline in sales in case of Maharastra Scooters India Ltd during
the study period.
Dispersions in Market share of Indian Automobile Industry
This section of this chapter intends to examine company wise
dispersion in market share of Indian automobile industry over the study
period. This is achieved through estimation of mean, co-efficient of variation
and compound annual growth rate which are presented in Table 3.13. It is
observed from Table 3.13 that under commercial vehicles sector on an
98
Table 3.13
Annual market share of selected automobile industry in India
Industry Range
(%)
Mean
(%) CV
CAGR
(%)
Commercial Vehicles
Ashok Leyland Ltd 31.05 - 39.39 35.00 0.09 1.67
Tata Motors Ltd 24.93 - 65.25 39.72 0.37 6.29
Eicher Motor Ltd 5.75 - 19.24 13.22 0.37 11.50
Swaraj Mazda Ltd 3.33 - 16.23 8.70 0.45 13.51
Passenger Cars and
Multiutility Vehicles
Hindustan Motors Ltd 2.67 - 11.23 6.75 0.34 2.09
Mahindra and Mahindra Ltd 36.45 - 57.23 46.74 0.15 2.50
Maruthi Udyog Ltd 23.82 - 41.33 31.43 0.21 -2.45
Daewoo Motors India Ltd 1.35 - 8.00 3.87 0.70 0.96
Two and Three Wheelers
Bajaj Auto Ltd 16.12 - 32.18 22.21 0.19 7.18
Maharastra Scooters Ltd 1.59 - 10.50 6.74 0.54 -9.97
TVS Motors India Ltd 10.31 - 18.21 13.75 0.19 3.64
Hero Honda Motors Ltd 8.27 - 14.24 10.84 0.17 5.45
Source: Computed
99
average Tata Motors Ltd (39.72 per cent) had the highest market share ratio
followed by Ashok Leyland Ltd (35 per cent) and Eicher Motors Ltd (13.22
per cent). The compound annual growth rate is positive in all industries over
the study period. The annual market share of selected automobile industry
during the study period has been shown in Appendix IV.
Among the selected passengers cars and multiutility vehicles on an
average Mahindra and Mahindra Ltd has the highest market share ratio (46.74
per cent) followed by Maruthi Udyog Ltd (31.43 per cent), Hindustan Motors
Ltd (6.15 per cent) and Daewoo Motors Ltd (3.87 per cent) during the study
period. The CV experienced a moderate fluctuation during the study period.
The analysis of compound annual growth rate of market share is positive in
all cases except Maruthi Udyog Ltd.
In case of two and three wheelers the market share is highest in Bajaj
Auto Ltd (22.21 per cent) followed by TVS Motors India Ltd (13.75 per cent),
Hero Honda Motors Ltd (10.84 per cent) during the study period. The CV
value experienced a moderate fluctuation during the study period. The
compound annual growth rate of market share is positive in all cases except
Maharastra Scooters India Ltd.
To conclude, the mean rates of market share vary greatly in case of all
the industries under examination irrespective of the sector to which they
belong.
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