Economic growth of any nation(either developing or developed) is mostlydependent on its key industry and its key resources .The automobile industry inour country has shown a constant and considerable growth and proven to be oneof the best ever growing and the prime movers of economic growthand major contributors towards the Gross Domestic Product (GDP) roughlyaround 7 % and due to rapid technologicalinnovation, there is tremendous growthin demand, and it generated huge employment in organized and unorganizedsegment Gottschalk and Kalmbach, 2007. The recent decade is eyewitness of thesignificant growth of automobile sector of developed countries and latest trendsand innovations and better government policies open a new chapter in automobilesector for developing nation like India Choudhary and Goyal, 1997Due to economicglobalization and government policies the automobile industry in india has showna enormous market potential.
Rapid technological changes and remarkabledevelopment in the field of science and technology, especially in communicationsand transport helps a lot to automobile industry .The government of India (GoI)has made tremendous changes like implementation of Goods and Services Tax (GST),ban on BS-III vehicles to control pollution, Bharatmala project and government’sambitious plans for a mass scale shift to electric vehicles (EVs) by 2030.Government’snew and innovative policies give opportunitiesfor overseas players to investments in the country. The Indian auto industry contributingaround 6-8 % of world market producing around 2.6 Million unit’s .The industryaccounts roughly 7% of the country’s Gross Domestic Product (GDP).
With aroundroughly 81 % of market share the two wheeler segment is the leader of the Indianautomobile market owing to a growing middle class and a young population. Indiais having a huge rural market hence companies are taking interest and exploringthe rural markets further aided the growth of the sector. The overall passengervehicle (PV) segment has around roughly 13 % market share. Figure 1 shows segmentwise market share of automobile industry in India which shows total productionof automobiles in units (millions) yearwise. Figure1.1:Segmentation of market share of automobile industry in IndiaThe gross turnover ofthe automobile manufacturers is shown in Figure 2 as per SIAM (Society ofIndian Automobile Manufactures) report, which has shown gross turnover ofmanufactures from 2009-10 to 2014-15 in USD Figure1.2 Gross Turnover of automobile manufactures 2009-10 to 2014-15 (Source: SIAMreport) India’s automotive industry is one ofthe most promising and competitive in the world market and this sector is havinghuge potential to progress in the near future. The increasing GDP andeconomical wealth have improved during the last decade which has increasedpurchasing power of the Indian purchaser specially in the car segment, which is most promisingsector and has shown remarkable growth rate in the recent time in terms ofproduction, sales and exports (The Equicom Research, 2013).
Despite slowdown ineconomy, shortage of skilled labor, diminishing export and saturating domestic urbanmarkets this sector has shown marvelous growth rate in recent decades .Thepassenger vehicle market, which constitutes around 80 per cent of automobilesales, has shown significant growth potential as passenger car in 2011 which isaround 13 per 1,000 persons (Delloite, 2011) is increased to around 18 to 20per 1,000 people in 2012-13 (Trefis, 2013). According to a recent study by theInternational Energy Agency (IEA), passenger car ownership in India will growby more than 700 % over the next two decades .According to Mr. Guillaume Sicard,President, Nissan India Operations, the income tax rate cut for individual taxpayers earning under Rs 5 lakh per annum will create a positive sentiment amonglikely first time buyers for entry level and small cars.
The Indian automotive sectoris estimated to grow around 10-15 per cent to reach US$ 16.5 billion by 2021from around US$ 7 billion in 2016. It has the potential to generate up to US$300 billion in annual revenue by 2026 and automobile sector generated 65million additional jobs and contribute over 12 per cent to India’s GrossDomestic Product.Asautomobile industry is one of the important and key drivers of economic growth inour country. The manufacturers in the field of automotive sector have to takesup a leading role in terms of quality expectations of customers, productvariety and complexity in manufacturing process. Driven by globalization andincreasing customer expectation the manufacturers are trying to offer a largerange of vehicle models and options to their customers. The enormous productvariety-induced complexity and the pressure from outside players the competitionis very tough and makes it hard to ensure effective & efficient logistics. Dueto this reason entire supply chain in automotive industry from allocation,storage of raw materials, timely procurement of spare parts, manufacturing offinished goods and delivery to customer is very important aspect .
Theuse of best supply chain managementpractices is one of the major challenges to automakers for achievingcompetitive advantage, especially in emerging markets like ours. Therefore itis required to examine various aspects of automobile supply chains in anemerging market which has its own peculiarities. The current research seeks tobring out challenges and complexities in automobile supply chains and presentingemerging trends from the global automotive industry and its applicability in indiancontext. This study mainly concentrate onthe issue that directly & indirectly impact the design and practices ofsupply chain strategy and supply chain flexibility dimensions on the supplychain performance.
Every company has a target to set best strategy &flexibility to enhanced performance