Surge In Fuel Prices and Its Effect on Automobile Industry

Group 3 Shreyash .S Seran P.K Donatus Hendrix Fernando Rajeshwari .V ManiBharathi Arun Kumar Khyati Saxena Raj Kumar Gopal . D Priyanka Jain

Importance & Why the topic

The automobile sector is one of the high performing sectors of the Indian economy.

This has contributed largely in making India a prime destination for many international players in the automobile industry who wish to set up their businesses in India. When there is Recession , Automobile Sector is the one which gets affected earlier.

Objectives
Primary Objective:
To study the surge in fuel prices and its effect on Automobile Sector in India.

Secondary Objective:
To analyze the factors for such increase and its effect on the consumers and the taxation policies by the government.

Introduction
Crude oil Import 100 Ton's Stability of Indian economy is directly corelated with Crude oil Increasing demand is not met by substantial supply Direct impact on Consumers which has a negative impact on Automobile sector

PESTEL analysis

Methodology

Type Of Vehicle Used

Others Type of Vehicle Used

13

Car

54

Bike

33

Travelling distance per month

Above 2000 13% 1500-2000 12%

1-500 30%

1000-1500 19% 500-1000 26%

Amount Spent for Fuel For a Month

30 24 22 12 12

BELOW 1000

1001-2000

2001-3000

3001-4000 ABOVE 4000

Fuel Price Hike Effect

12% 35% BADLY AFFECTED AFFECTED 53% NOT AFFECTED

Slowdown Effect in the 2 wheeler industry

Jul-12 Jul-11

475363 473033 202336 200535 140806 160354

HERO MOTO CORP

BAJAJ AUTO

TVS MOTOR

Effect in 4-Wheeler Industry

1.7.11 to 30.6.12 1.7.10 to 30.6.11

Maruthi SWIFT

95 133 4 9 4 3 13 43

Maruthi 800

Tata SAFARI

Tata NANO

Reason For Change Of Vehicle

12% 32% 14%

PRICE HIKE

MILEAGE

DESIGN

17% 25%

OBSELETE

OTHERS

Preferred Mode of Transport

5

OTHERS

PUBLIC TRANS

29

PERSONAL BIKE

36

PERSONAL CAR

30

Basic Price Rs 31.91

Dealer Commission Rs 1.05 VAT

Crude oil Custom Duty Rs 1.54

Petrol Custom Rs 5.76

Rs 14.40 Excise Duty Rs 14.35

Transportation Charge Rs 3.72 Education Tax Rs 0.43

TAX 56.39 % (Rs 41.25)

Findings

Lower middle class people are affected.

Automobile production cuts down

Taxation is more People started using public transportations

Contd
Increasing fuel rates is directly proportional to FMCG, Groceries etc People have the capacity to purchase a vehicle but are hesitant due to hike in fuel Many households have vehicles for every individuals

Electric/hybrid vehicles can cut down a major portion of their expense

Suggestions
Temporary Plans: Public Transports.

 Future Plans:
Government has signed agreement between Turkmenistan-AfghanistanPakistan to bring fuel to India through a pipe line by 2018

Bio- fuel is one very good substitute , very eco-friendly and very cheaper

Conclusion
By 2050 it is predicted that ,there will be no fuel in the planet With 10% rise in crude oil price it will impact on agriculture at 8%, transport on 4%, and household items on 4% and other items 2% Use electronic car , bike which is very economical and this even the automobile sector to grow but not to fall

There is a high rate of taxation on fuel prices which needs to be cut down

Contd.
In long term shift to alternative fuel (hydrogen / Electricity) or the living standards will decline increasingly Government should make stringent NORMS as to allowing only those vehicles which are fuel efficient If price of fuel keeps on increasing people will permenantly shift to public transport where automobile industry can go to disaster.

Survival Code
SAVE OIL ,SAVE MONEY
SAVE OIL ,SAVE INDIA SAVE OIL ,SAVE EARTH SAVE OIL ,SAVE OURSELVES