SLOW DOWN IN AUTOMOBILE SECTOR

MGN581

Management and Organizational Behaviour Dynamics

Submitted by: Submitted to:

Naureen Shabnam 11907578 Dr Shikha Goyal
Shivani Sharma 11907554
Harshit Chandna 11911510

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LOVELY PROFESSIONAL UNIVERSITY

Academic Task -3

Mittal School of Business

Name of the faculty member: Dr Shikha Goyal

Course Code: MGN581 Course Title: Management and Organizational Behaviour

Dynamics

Class: MBA Term: One (Trimester) Section: Q1943

Batch: 2019 -2021 Max. Marks: 30

Date of Allotment: 9th Aug 2019 Date of Submission: 17th Sept2019

S. No Roll No. Objectives Topic Details Evaluation Expected

of Academic Parameters outcomes
Activity
1 All To improve Please refer to page 2 of Written Report This
the will include three assignment will
students analytical this document. different parts help the
(Group skills & mentioned in the students in
make IP. Each part will developing
Assignmen students able be given for 10 good analytical
t with 3 - 5 to marks. Detail will and writing
understand be discussed by skills.
members the practical the instructor in
situations the class room.
in each
Prevailing in
group) the area they
have chosen
for news
analysis.

RUBRIC FOR NEWS ANALYSIS

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Criteria Exceeds the Fully Meets Minimally Doesn’t Ratin

Standards the Meets the Meet the g
Standards Standards Standards
Analysis of Has a very clear Properly Although Missed all of
the news understanding of identifies the various the important
the background of various aspects of aspects of the
chosen event, the aspects news are news and
present situation of the news Identified, students are 10
and the and is able to but the not able to
consequences (if clearly point description clearly define
applicable) and out the nature fails to the purpose
students are able of the clearly of the news
to incorporate consequences define the and its
their knowledge . students significance.
insights in thought .
addressing the process
news writ the
10 mark news
6 mark

Zero

3 mark
Ability to Specific, clear, Link was Link was Link is
link the and appropriate adequately confusing, inappropriate
news with link established established incomplete and does not
the concept/ by the students and described and lacked align with the 10
theory between the between the relevance concepts
content analysis content to the discussed in
and concepts analysis and concepts the class.
discussed in the concepts discussed
class. discussed in in the class.
the class.
10 mark 3 mark
Zero

6 mark
Ability to Suggestions are Suggestions Suggestions No relation
give clearly related to are clearly does not between
recommend the news and related to the reflect the suggestions
ation/ gives proper news and clear given and the
Suggestion justification with gives proper picture of news
conceptual justification news analysed. 10
knowledge.
10 mark
6 mark Zero
3 mark

TOTAL 30

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Course Code: MGN581 Course Title: MANAGEMENT AND ORGANISATIONAL

BEHAVIOUR DYNAMICS

Course Instructor: Dr. SHIKHA GOYAL

Academic Task No.: 03 Academic Task Title: NEWS ANALYSIS

Date of Allotment:9th Aug 2019 Date of submission: 17th Sept2019

Students` Roll no: RQ1943B35 Student’s Reg. no: 11912588

RQ1943B36 11911510
RQ1943B37 11907554
RQ1943338 11907571
RQ1943B39 11907578

Evaluation Parameters:

Learning Outcomes:

1.

2.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other student’s
work or from any other source except where due acknowledgement is made explicitly in the text, nor
has any part been written for me by any other person.

1. Mamas Raj Srivastava (B35)-

2. Harshit Chandna (B36)-

3. Shivani Sharma (B37)-

4. Abhinav Trivedi (B38)-

5. Naureen Shabnam (B39)-

Evaluator’s comments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

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Evaluator’s Signature and Date:

Marks Obtained: _______________ Max. Marks: ______________

PEER RATING:

MARKS MARKS TOTAL

ROLL ALLOCATED BY ALLOCATED BY MARKS
NO. NAME STUDENTS LECTURER OBTAINED SIGNATURE
MANAS RAJ
 B35 SRIVASTAVA  05      
 B36 HARSHIT CHANDNA  10      
 B37 SHIVANI SHARMA 10      
 B38 ABHINAV TRIVEDI 00      
 B39 NAUREEN SHABNAM 10      

Content

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1. Summary ……………………………………… 3-6

2. Challenges …………………………………… 7-8
3. Solutions……………………………………… 9-10
4. Concept of OB and Management ………… 11-14

News Headlines Glimpses of Slow Down in

Automobile Sector
Date HEADLINES
2-Sep-2019  Auto Sales Crash in Aug to (for Tata Motors and Honda Cars,

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Sales more than halved.

3-Sep-2019  Automakers dole out offers in diesel Models

 Maruti reduces production for 7th straight month in August

4-Sep-2019  Truck Sales crash 60%

 Closures, output cuts hit small auto part makers

 Two- Concessions heeler sales continue to skid

 Ashok Leyland gets BSVI approval for heavy trucks.

5-Sep-2019  New MTV Act spurs ride -haling firms to lobby for concession

 Automobiles Dealers look for ways to arrest slumps

 Contract workers bear the brunt of auto slow down.

7/8-Sep-2019  Used car market on growth track, but auto crisis casts a shadow.

 Make in India to cut imports Maruti to auto parts industry

9-Sep-2019  In a First, Maruti to lease 100 sales outlets to car dealers

 Fitment panel holds back GST rate cut on cars.

 Prices of BSVI diesel models may rise 20%: Toyota

10-Sep-2019  Auto Sales see worst Fall in August, down 23.5%

 Ashok Leyland declares non – working days in September.

11-Sep-2019  Slowdown not only Hurdle for auto sales: industry

13-Sep-2019
 M&M Offers subscription – based SUVs
14/15-Sep-2019

16-Sep-2019  Slowdown effect: Half of cars carriers stuck in Garages

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 Auto sector hopes fade as GST cess mop – up declines

 Maruti loss is Hyundai’s Gain

Background of the news

In July, the sale of vehicles across categories in the country slumped 18.71% to about 18.25
lakh units, down from about 22.45 lakh units, a year ago in the same month. This has been
the steepest slowdown in nearly 19 years. This data, by the Society of Indian Automobile
Manufacturers (SIAM). The passenger vehicle segment, which comprises cars, utility
vehicles and vans, has been one of the worst performing segments, registering its highest
drop in sales. This was also the ninth straight drop in monthly passenger vehicle sales. With
the industry failing to arrest the downturn that started almost a year ago, despite deep

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discounts and new model launches it has been forced to undertake production cuts. This has
also led to the trimming of over 2.15 lakh jobs in the sector.

The industry started off 2018-19 on a good note with vehicles sales across categories
growing 18% to nearly 70 lakh units in the first quarter (April-June 2018). During the
quarter, passenger vehicle sales were up nearly 20%, commercial vehicles sales were up
51.55%, and that of two-wheelers grew 16%. However, domestic passenger vehicle sales
declined for the first time after nine months in July 2018. In July 2017, vehicle sales reduced
due to the benefits extended by the implementation of the Goods and Services Tax (GST).
However, demand failed to pick up in August and September after the floods in Kerala and
heavy rainfall in several other States.

In the ensuing months, consumer sentiment remained were affected as the total cost of
vehicle ownership went up largely due to an increase in fuel prices, higher interest rates and
a hike in vehicle insurance costs. In that environment the festive season failed to boost
demand leading to a huge inventory pile-up with dealers. Nearly half the vehicles sold in
rural markets is witnessing a higher growth rate in comparison to urban markets are financed
by non-banking financial companies (NBFCs). As a result of all these factors, all vehicle
categories, including commercial vehicles and two wheelers, began experiencing negative
growth beginning December setting alarm bells ringing. The automobile sector is one of the
largest employers in the country employing about 37 million people directly and indirectly.

Current Slowdown

Research has pointed out that the current slowdown in the sector is very different from the
ones that the industry has gone through earlier. First the slowdown is driven by domestic
factors, including the NBFC crisis, while the earlier ones were by global events. It also
pointed out that over FY19-21 vehicle prices are estimated to jump 13-30% due to safety,
insurance and emission-related compliance costs. For end consumers such a price hike can
prove a hurdle in growth. The growing competition from the pre-owned cars market is also
pulling down sales of new vehicles. For example, in the passenger vehicles segment, while
the new vehicles market grew 2% in FY19 the pre-owned market saw double-digit growth.

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Problem
1. Harder to get loans- Due to some frauds, banks become very strict to give loans to
the customers but they are giving preference to customers who are having good
CIBIL scores.

2. Confusion- Customers are having confusion regarding the BS VI. they don’t know
about these norms as well as they are not aware about on which type of cares these
norms are going to be applied (fuel or engine)

3. Waiting for attractive deals - Customers are waiting for the better and big deals as
now there is already a slowdown is going.

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4. The olas Cabs factor - People are having the option to book a car and go where ever
they want to instead of buying a car. this is the main reason of customers that they are
showing no interest in buying a car.

5. Big cities crowd: Big cities are very crowded with the cars and other vehicles; this
leads to more traffic jams and more pollution. due to Traffic jams people stuck in the
jams and didn’t reach on time, people think who will buy a car and then a space for
parking so they try another convent.

6. New laws: There are so many changes are taken place in the market, new regulations,
increase in the tax, increase in the insurance. So, customers are just sitting back and
waiting for the new things settle down first.

7. Electricity vehicles factor: There is new factor in the market. Electricity vehicles
leaves uncertainties in market, investors are also confused about how much they
should invest and when to invest.

8. Uncertainty of diesel: A big investment is needed to upgrade the cars version and
this investment will borne by the customers.

9. Miscellaneous Factors: Aside from the various factors listed above, there’s a
combination of frequent changes that led to this slump. Higher and non-standard road
taxes, which have been too frequent and inconsistent have led to auto-makers having
to increase prices of vehicles.

Solution
1. Electric vehicles- Electric vehicles might be a future of country but still it’s still it’s
at 3- 5 years away of getting into mass segment. Recent statement by our finance
minister that nothing is wrong in buying BS VI car currently and even after the act
implementation. There won’t be any challenge to drive this type of vehicles. this will
reduce confusions among the buyers.

2. The GST- The government must reduce GST slabs on automobile, stage government
must reduce registration tax. Now, most of the countries are taking registration tax on
factory price as well as on GST.

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3. Housing loan- Provision of income tax benefit on interest paid. same scheme should
be introduced in housing loan.

4. Banks- Government need to give confidence to banks as well as push banks for
higher lending. Banks need to pass - on RBI’S reduction in repo report. If the interest
rate will be reduced it will help gaining the confidence of the customers.

5. Private investment- Government should increase the spending in government sector

when private investment is low. Higher government spending will help grow
economy.

6. Scrappage policy- Government should bring the scrappage policy as soon as policy.

7. Tax- Tax terrorism must be addressed. Tax dispute redressals should be swifter.

8. Job creation- Job creation is very important. more and more manpower are required
in automobile. Credit availability to SMEs would help in job creation.

Management and Organizational Behaviour

1. Sales down Production down Inventory down- Automobile sector is facing sever
slowdown which will affect the sales of the vehicles production will be stopped and
this will lead to low contribution in GDP.

2. Lay off- Layoff of employment of employees either temporary or permanent. They

have witnessed massive layoff due to slowdown they have removed there temporary
and the permanent workers which will affect the industry massively.

3. Lack of strategic planning – Planning is required to remove the slowdown such as

GST slab rate should be reduced, bank should reduce the rates of car loan and

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implementation BSVI norm should be done like this so that people should be aware
from this.

4. Awareness- People should be aware about the changes which is continuously

happening in the automobile industry. People should know about the current changes
such as adoption of Evs and the newer engines in the auto mobile sector.

5. Concession- Rather than directly firing the employees the industry and the employees
should come up with a solution that employee should adjust with the salary till the
industry is facing slowdown.

6. Retirement – Layoff is not the only solution the industry should adopt a proper
method such as retirement like they can give proper retirement by giving the
employees the retirement benefits such as provident fund etc.

7. Organisational culture- The company should adapt the change that is happening in
the economy such as reduction in GDP of India so the automobile sector should
accordingly reduce its production also.

8. Motivation- The employees also need proper motivation to work in an organisation

which is continuously facing slow down as there is no future certainty is there for
them, if the slowdown continues, they may lose their jobs.

Glimpses of the news

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References
https://www.thehindu.com/business/Industry/why-is-the-auto-industry-facing-
trouble/article29121023.ece

https://www.zigwheels.com/news-features/news/the-indian-auto-industry-
slowdown-an-analysis/34833/

https://www.zigwheels.com/news-features/news/the-indian-auto-industry-
slowdown-an-analysis/34833/

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