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TABLE 2.16: SUMMARY OF THE KEY INDICATORS OF THE SIZE AND
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- Motorcycle 1,481,111 Rickshaws 14,676 Tractors 73,844 Buses 661
- Value Added Rs. 108 billion 4.8% of Manufacturing 0.7% of GDP Trade
- Contribution to Revenue
- Industrial Employment Turnover Investment Revenue
- 2.4. DEMAND ANALYSIS
| TABLE 2.16: SUMMARY OF THE KEY INDICATORS OF THE SIZE AND CONTRIBUTION TO THE ECONOMY BY THE AUTOMOTIVE SECTOR Turnover Assemblers Rs. 234 billion Domestic Parts Rs. 168 billion Total Rs. 402 billion Production Cars 121,647 Jeeps, etc. 16,940 Motorcycle 1,481,111 Rickshaws 14,676 Tractors 73,844 Buses 661 Trucks 3,691 Employment Assemblers 22,254 Domestic Parts 187,070 Manf. Total 209,324 Value Added Rs. 108 billion 4.8% of Manufacturing 0.7% of GDP Trade Exports $89 million Imports $835 million Value of Cumulative Investment $2.8 – $3.0 billion Foreign Exchange Saving $704 million Contribution to Revenue Rs. 61,757 million Source Derived from earlier Tables. 32 TABLE 2.17: INTERNATIONAL COMPARISON OF THE CONTRIBUTION TO THE ECONOMY BY THE AUTOMOTIVE SECTOR, 2010 Country As % of GDP Employment as % of Industrial Employment Turnover Investment Revenue Argentina 1.2 - 0.3 0.3 Brazil 1.6 0.1 - 1.4 China 1.9 0.1 - 0.8 Egypt, Arab Rep. 1.7 1.0 1.1 1.4 India 1.2 0.1 0.8 0.3 Indonesia 0.7 0.2 - 0.3 Malaysia 3.3 0.7 - 1.5 Mexico 0.4 - - 1.2 Thailand 4.7 0.2 1.1 2.4 Turkey 4.9 0.1 1.8 4.3 Pakistan 1.6 0.1 0.4 0.2 Source Production Statistics 2011, OICA (oica.net/category/production-statistics/) World Development Indicators, World Bank. * excluding autoparts 2.4. DEMAND ANALYSIS The automotive sector is prone to business cycles with a fairly large amplitude. In the s the sector showed high growth starting from a low base, but showed only modest growth in the s. Between 2002-03 and 2007-08 it experienced explosive growth. Thereafter, the sales of cars, in particular, have shown a sharp decline. What factors explain the variation in the growth rate of the sector as measured by the volume of sales of different types of vehicles Results of OLS estimation of the demand equations for three types of vehicles, viz, cars motorcycles and tractors, are presented in Table 2.18. The results indicate the following i) The short-term income elasticities are generally high, ranging from 2.75 to almost 4. This implies that fluctuations in the growth of real per capita income in the economy have a magnified effect on demand for vehicles. ii) The elasticities with respect to relative price of vehicles are low. This could explain the aggressive pricing policy, especially in the case of cars. iii) The elasticities with respect to interest rate are significant and moderately high. The explosive growth of sales in the middle of the last decade can be partly attributed to the steep fall in interest rates on advances from over 14 percent to just over 7 percent and the increased availability of consumer financing by banks. The issue is what the implications are of the propensity of the automotive sector to sharp fluctuations in the growth of sales. This may justify, for example, the presence of 33 significant excess capacity to take advantage of a sharp upturn or the need for maintaining liquidity in the form of reserves to take care of downturns. Download 0.77 Mb. Share with your friends:
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