Research & Development

Automobile Industry

We expect two-wheeler demand to benefit from the increase in disposable income due to alteration in income tax slabs and the cut in excise duty, which is likely to be passed on due to intense competition. We expect small car manufacturers also to pass on the benefit, resulting in a favorable demand. However, commercial vehicle manufacturers may increase their margins by retaining the benefit. The waiver of loans for small and marginal farmers will have a neutral tractor sale.

Divergent growth trends across segment

In 2007-08, the total automobiles market size (including exports) is expected to touch Rs 1,290 billion, a growth of 4.3 per cent over 2006-07. Tighter credit disbursement and rising interest rates have resulted in a drop in sales of two-wheelers and tractors. Commercial vehicles have witnessed a mixed trend - while MHCV sales have registered a decline, LCVs are reporting strong growth. Growth continues to be healthy for cars and UVs as well due to rising incomes and new model launches.

Margins of two-wheelers and tractors have come under pressure due to a decline in volume, rise in input costs and impact of rupee appreciation on export realisations. Car manufacturers reported a marginal decline in margins primarily on account of rising input costs. However, commercial vehicle manufacturers have shown an improvement in margins due to an increase in product prices. In 2008-09, automobile sales are expected to grow by around 12 per cent in value-terms, driven mainly by favourable demographic trends, anticipated growth recovery in commercial vehicles and robust export growth.

Automotive Challenges

• Business transactions to sustain and grow core revenues

• Cost reduction

• Performance improvement

• Emerging markets

• Excess labour, production capacity,

• Bulk inventory, and pressures on margins

• Improving supply chain efficiency

• Managing retiree health care costs

• Retail and distribution performance

• New regulations (accounting standards, government regulations - e.g., block exemption reform, IFRS, ELV, CAFE, EU accession, CO2 regulations)

• Environmental sustainability

• I.P.R

• R & D outsourcing

• Brand Valuation

• To setup In-House R & D Centre

• There after, Global R & D

We expect two-wheeler demand to benefit from the increase in disposable income due to alteration in income tax slabs and the cut in excise duty, which is likely to be passed on due to intense competition. We expect small car manufacturers also to pass on the benefit, resulting in a marginally favorable impact on demand. However, commercial vehicle manufacturers may increase their margins by retaining the benefit. The waiver of loans for small and marginal farmers will have a neutral impact on tractor sales.

Auto Policy of the Government of India - Vision

Policy Objectives- This policy aims to promote integrated,phased,enduring and self-sustained growth of the Indian automotive industry. The objectives are to :-

Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country;

Promote a globally competitive automotive industry and emerge as a global source for auto components;

Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry;

Conduce incessant modernization of the industry and facilitate indigenous design, research and development;

Steer India's software industry into automotive technology;

Assist development of vehicles propelled by alternate energy sources;

Development of domestic safety and environmental standards at par with international standards.

Companies can take advantage of the tremendous prospects in the automobile sector combined with big tax benefits, grants, subsidy offered by the Indian government by setting up an in-house R and D centre.

We can help you with all the formalities required to set up in-house R and D Centre including project report tax saving advise and provding personnel trained/Scientist in automobile industry.