+ All Categories
Home > Documents > Analysis of Production and Sales Trend of Indian Automobile...

Analysis of Production and Sales Trend of Indian Automobile...

Date post: 13-Mar-2020
Category:
Upload: others
View: 4 times
Download: 0 times
Share this document with a friend
28
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 place 1 . 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 manner 2 . 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.
Transcript
Page 1: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 2: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 3: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 4: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 5: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

76

Page 6: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 7: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 8: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 9: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 10: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 11: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 12: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 13: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 14: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 15: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 16: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 17: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 18: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 19: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 20: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

91

Page 21: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 22: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 23: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 24: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 25: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.

Page 26: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 27: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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

Page 28: Analysis of Production and Sales Trend of Indian Automobile Industryshodhganga.inflibnet.ac.in/bitstream/10603/4832/13/13_chapter 3.pdf · Analysis of Production and Sales Trend of

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.


Recommended