IBM and University of Michigan Reveal India's Automotive Industry Challenges

India Needs to Overcome Challenges in Infrastructure, Product Quality, Labor and Tax Regulations to Meet the Demands of the Global Automotive Industry

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ARMONK, NY - 16 Jul 2007: A study unveiled today by IBM (NYSE: IBM) and the University of Michigan's Transportation Research Institute reveals that India still needs to overcome significant challenges to continue its rapid growth in the automotive industry, and that the path to success is an even stronger partnership between industry and government. India faces challenges in the areas of transportation infrastructure, product quality, and skilled workers as well as labor and tax regulations. The study authors interviewed industry executives, academics, industry experts, and government officials to get a picture of what India itself sees as the real future state of its automotive industry.

India is expected to be one of the top 10 countries in terms of vehicle sales by 2015. The number of four-wheelers sold in 2006-2007 was about 1.4 million. But industry executives interviewed for the study expect sales to double to 2.8 million by 2010 and triple to 4.2 million by 2015. The interviewed executives also expect an increase from 7 to 17 million two-wheelers from 2005 to 2015.

"The Indian government will certainly play an integral role in shaping the automotive industry and its future. Their Automotive Mission Plan could be construed as a step in the right direction as it outlines development goals till 2016, including the role of the government in improving infrastructure, tax and labor law revisions," said Bruce M. Belzowski, assistant research scientist & associate director, University of Michigan Transportation Research Institute, Automotive Analysis Division. "Most of the interviewed industry experts are optimistic about government's support for the growth of the industry."

Among the study's specific findings in three major areas are:

India's automotive market  

 India's production capabilities 

Challenges that impact India's automotive industry  

 "IBM has taken the lead in identifying the challenges of India's automotive industry," said Sanjay Rishi, global automotive industry leader, IBM Global Business Services. "India's automotive market has come a long way in a short period, growing more than 15 percent compounded annually since 2001. Based on the study, we have developed the next action steps for them to become successful industry players as well as a key market while maintaining the historical double-digit growth in the future."

The key next action steps for India's success are:  

The results from the study were part of extensive research which gathered, via in-person interviews, the opinions of leaders from the Indian automotive industry and government, complemented by views from academic experts.

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About University of Michigan's Transportation Research Institute

The Automotive Analysis Division, a research unit of the University of Michigan Transportation Research Institute, has performed research, analysis, and communication activities focused on the future of the global automotive industry for over 25 years.

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