1.

1 IMPORTANCE OF THE TOPIC

There are about 1.3 million people who work under automotive industry in India and it is one
of the most prominent employment generating industry. It is important to study the
challenges faced by this industry during the pandemic and analyse how the business could be
revived and measures taken by the industry giants like Hyundai and Honda to get back on the
track.
When we look at the automotive industry it has seen a lot of fluctuations in market during
2019 due to the BSVI emission norms and in the early 2020 all the manufacturers were ready
with their product line-up including Hyundai and Honda with their noteworthy products like
Hyundai Creta, I20, Xcent, Honda City, Brv etc. All these products were all set to get into the
market but were on a stall due to pandemic and the respective companies had to face huge
losses. Hyundai motors sales fell 47% during March 2020 and Honda saw an all-time fall of
about 44% during the same period.
As per information from the Society of Indian Automobile Manufacturers (SIAM), traveller
vehicle deals rose by 14 percent in August to 215,000 units as against 189,000 units in the
exact month of a year ago, while cruiser deals shot up by more than 10 percent at 1.3 million
units versus 940,000 units in August 2019 – with the two fragments getting back to a positive
area following nine nonstop long stretches of decrease.
The Motor Vehicles Act 1988 (MVA) read with the Central Motor Vehicles Rules 1989 (the
CMV Rules) issued thereunder by the central government constitutes the principal regulatory
framework for manufacture, registration and insurance of automobiles and automobile parts.
The MVA vests authority with the central and state governments to make and implement
rules regulating the construction, equipment and maintenance of automobiles with respect to
several aspects including dimensions, emission norms, automobile parts such as brakes,
steering gears, safety devices and warranty after sales. The central government primarily
administers and regulates the industry through its apex wing, the Ministry of Road Transport
and Highways. The industry has seen a lot of hiccups since a year and it is very much
important to investigate the factor to revive the business and create employment
opportunities.
It is very important to analyze various setbacks faced by Hyundai and Honda as they are a
very large employment providing companies in terms of auto sector and which in turn
impacts the GDP growth of India.
INDUSTRY ANANLYSIS

The car business in India is world's fourth biggest, with the nation right now being the world's
fourth biggest maker of vehicles and seventh biggest producer of business vehicles in 2018.
Indian car industry (counting segment producing) is required to arrive at Rs 16.16-18.18 trillion
(US$ 251.4-282.8 billion) by 2026. Bikes rule the business and made up 81 percent share in
the homegrown automobile deals in FY19. In general, Domestic autos deals expanded at 6.71
percent CAGR between FY13-18 with 26.27 million vehicles being sold in FY19. Indian car
industry has gotten Foreign Direct Investment (FDI) worth US$ 23.51 billion between April
2000 and September 2019. Five percent of absolute FDI inflows to India from April 2000 to
June 2019 went into the vehicle’s division.
Homegrown automobile creation expanded at 6.96 percent CAGR between FY13-19 with
30.92 million vehicles fabricated in the nation in FY19.
In FY19, business vehicles recorded the quickest pace of development in homegrown deals at
17.55 percent year-on-year, trailed by three-wheelers at 10.27 percent year-on-year. Major
players in the industry considering the car market are Maruti Suzuki, Hyundai, Tata, Honda
etc. Without a doubt, with the interest for shared versatility failing endlessly in the post-Covid
19 world and individuals liking to purchase vehicles, evaluate self-drive or self-governing
vehicles and electric vehicles, the car segment is by all accounts taking advantage of the open
door emerging out of misfortune.
This is an unmistakable exercise for the Indian automobile industry that fundamental and key
foundation must be set up a long time before items and arrangements are turned out. Normal
working conventions. Charging frameworks. Street plan. Crisis alarm and salvage frameworks.
Order implementation. Resting focuses. Street wellbeing. Traffic signage. Fuel quality. Power
soundness. Also, some more.
It is the ethical obligation of the business to demand and guarantee from the government[s] and
different foundations that this is set up before existing versatility arrangements are extended
and new ones are presented.
The Indian vehicle industry saw its most noticeably awful ever half-yearly execution (April-
September 2019) as deals jumped 17.08 percent to 11,736,976 units. The traveler vehicles
fragment saw a general decrease in deals of 23.56 percent at 1,333,251 units in this period.
Bike deals likewise kept on falling, with month to month deals of 1,656,774 units in the main
portion of this monetary, when contrasted with 2,126,445 units in September 2018, enrolling a
plunge of 22.09 percent. Inside the portion, bike deals nose-jumped 23.29 percent, seeing the
most noticeably awful fall in almost twenty years.
Among all the classes, the deals of business vehicles (58,419 units) saw the steepest plunge of
39 percent. Inside the fragment, Medium and Heavy Commercial Vehicles (M&HCVs)
revealed the first-historically speaking decay of 62 percent a month ago, with deals of 14,855
units, when contrasted with 39,210 units in the very month a year ago.
Given the circumstance, the traveller vehicle portion's objective of arriving at the 5-million
homegrown deals mark by 2020 looks inaccessible right now, as it is set to psychologist to
around 3 million units in FY 2019-2020, down from about 3.4 million units in FY 2018-2019.
The objective probably won't be accomplished until FY 2024-25 and except if the business
develops with an exacerbated yearly development pace of 10.5 percent, which is clearly on the
hopeful side on the off chance that one considers the difficulties because of the new BS-VI
standards and different interruptions. This additionally implies we will miss the mark regarding
accomplishing the following Automotive Mission Plan 2016-26 by a generous edge.
The execution of BS-VI standards will cause a cost hop of about Rs 15,000-25,000 of
petroleum models and Rs 50,000-70,000 of diesel vehicles, which is relied upon to additionally
affect request. The progress to BS-VI will likewise prompt a creation slice of up to 20% in
December, January and February of 2020 to oversee stock.
Six of Hyundai models are BS-VI-consistent, while Honda Motorcycles and Scooters India has
dispatched the BS-VI-agreeable Activa 125 for the best 50 urban areas. In any case, both the
producers have uncovered that the effect on request has been significantly less than was normal.
The circumstance is terrible to such an extent that limits and complimentary gifts have
proceeded for longer than a year at this point, with almost no assistance in prodding any
significant interest. Nonetheless, the up and coming arrangement on scrappage should go about
as a supporter. During December-February, we may likewise observe minimal development in
retail because of BS-VI pre-purchasing and year's end limits.
The decrease in framework related work has projected its shadow on the development hardware
(CE) area, which is in for a hard arriving in FY 2019-20. As per industry specialists, the money
related issues that have sprung up as a result of the credit mash in non-banking budgetary
organizations (NBFC), combined with the lull in the public street development program and
deferral in granting new framework ventures by the legislature, have gouged the business
volume of development gear by more than 25 percent in the main portion of FY'20.
Overall, the auto component industry is running at as low as 50% capacity utilization, forcing
it to hold investment worth about $2 billion for capacity expansion. A good number of small
and medium enterprises in this space have either closed down or are on the verge of winding
up their business due to less customer interest and rising level of debt in terms of rents.
However, the biggest shocker was the Central Statistics Office’s (CSO) latest numbers, which
revealed that growth rate in the first quarter ended 30th June had dropped to a six-year low of
5%, marking the slowest growth since the fourth quarter of FY’13.
The abatement in structure related work has extended its shadow on the improvement
equipment (CE) region, which is in for a hard showing up in FY 2019-20. According to industry
masters, the cash related issues that have jumped up because of the credit squash in non-
banking budgetary associations (NBFC), joined with the break in the open road advancement
program and deferral in conceding new structure adventures by the lawmaking body, have
gouged the business volume of improvement gear by in excess of 25 percent in the principle
bit of FY'20.
Generally, the auto part industry is running at as low as half limit use, driving it to hold
speculation worth about $2 billion for limit development. A decent number of little and medium
ventures in this space have either shut down or are very nearly wrapping up their business.
Further, as indicated by information from the Center for Monitoring Indian Economy (CMIE),
India's joblessness rate increased to 8.5 percent in October, the most elevated since August
2016, and up from 7.2 percent in September this year.
These numbers depict a disheartening perspective on the future, and standardization of the
business' development may take at any rate 18 two years, contingent upon the exhibition of the
various fragments.
The greater concern is that the predominant lull isn't confined to the USD 100-billion car
industry as the whole economy has been sad throughout the previous hardly any years.
This monetary emergency is reflected in the Goods and Services Tax (GST) assortments in
September, which shrank to a 19-month low of Rs 91,916 crore from Rs 98,202 crore that was
gathered in August and Rs 94,442 crore in the exact month a year back.
As indicated by information delivered by the money service, this was the second consecutive
month of decrease in the GST assortments. There has been a little uptick in assortments in
October 2019 over the earlier month, yet on a year-on-year premise, income declined 5.29% in
the very month. Also, GST confronted significant glitches and complexities, which made issues
for organizations, particularly little ones.
In any case, the greatest stunner was the Central Statistics Office's (CSO) most recent numbers,
which uncovered that development rate in the primary quarter finished 30th June had dropped
to a six-year low of 5%, denoting the slowest development since the final quarter of FY'13.
The depressing business sector situation has prompted offices, for example, the IMF, World
Bank and S&P, bringing down their FY20 India GDP projections by 6.3%, 6.1 % and 6%,
separately. Taking a gander at the circumstance, these projections look very exact.
This will likewise lessen the auto segment's commitment to GDP to about 7.2% in FY'20 from
about 7.5% in the last monetary year.
India's center area yields additionally contacted a 14-year low, with a withdrawal of 5.2% in
September 2019. As the car division is at the focal point of every single financial movement
and responds to the exhibition of the general economy, recuperation isn't in see at any point
soon.
The automakers themselves started witnessing a slowdown after September 2018. Yet, many
ignored the downward trend and kept on building inventory to show growth in their wholesale’s
numbers. However, this backfired as even the 2018 festive season could not improve sales,
leading to a massive inventory pile-up of two-wheelers and passenger vehicles across
dealerships. To balance the inventory, manufacturers had to resort to continuous production
cuts in the last few months. MSIL announced a 25 per cent cut in production in July 2019.
In addition, the administration's measures gave cash to organizations and we saw not many
automakers giving the advantage to clients; because of this, there was no significant interest
help. Notwithstanding, this may open doors for electric vehicles and its partnered businesses
for neighbourhood producing.

The administration's purpose to make India a USD 5-trillion economy by 2025 may appear to
be unreasonable at present however this can even now be cultivated given fundamental
measures are taken to guarantee that the nation develops by a CAGR of 14%, and the
assembling part includes in any event USD 1 trillion in the following five yearsPolicy changes,
such as increased upfront insurance premiums and new axle norms, were the obvious
dampeners in the short to mid-term. High fuel prices and the liquidity crunch, post the IL&FS
crisis, also added to the woes. The next challenge could be the recent draft notification by the
Ministry of Road Transport and Highways (MoRTH), which proposes a manifold jump in the
registration costs of vehicles.
Many companies in the industry have a vital role in helping the nation’s economic growth and
some of those notable companies are Maruti Suzuki, Tata, Hyundai, Honda etc and all these
contenders have been in the market for over 15 years and created a strong foothold in India.
The car business incorporates bike, four-wheeler, traveler vehicle and business vehicles. In
2018-19, 4.06 million vehicles were made and at present around 32 million vehicles run on
Indian roads. The bike portion rules the business with a portion of 80 percent.
In 2019-20, in any case, the area confronted inconveniences in keeping up deals and benefit
numbers on quarterly and even yearly premise. In August 2019, there was a 35.9 percent drop
in homegrown deals for market pioneer Maruti Suzuki with 94,728 units being sold because of
repressed market certainty, slow monetary development and emergency in the non-banking
money related organizations (NBFCs).
The March 2020 numbers show the impact of lockdown because of the COVID-19 pandemic.
The most recent month of any monetary year is typically the pinnacle time frame for stock
leeway for the business. Maruti Suzuki India saw its absolute homegrown traveler vehicle deals
fall 47.4 percent to 76,240 units in March 2020 contrasted and 145,000 units in March 2019.
The fare deals were down very nearly 55 percent to 4,712 units from 10,463 per year prior.
With generally speaking deals somewhere near 16 percent, the organization finished FY20 with
an all out deals of 1.563 million units, down from 1.862 million in the past financial.
Additionally there was a 40 percent decrease in homegrown deals of Hyundai Motor India to
26,300 units in March 2020. Comparative pattern was seen in Mahindra and Mahindra's
homegrown traveler vehicle deals, which radically plunged 88 percent to 3,384 units in March
2020 from 27,637 units in March 2019.

The change from Bharat Stage 4 (BS4) to Bharat Stage 6 (BS6) outflow standards has likewise
added to the misfortunes of the area as BS6 was to be actualized from April 1, 2020. This got
long haul issues to the car business from both assembling end to deals point, for example,
innovative work, mechanical upgradation and shutting down of plants to quit accumulating of
old stock. As new BS6 vehicles were not many in the market and the change to BS6 saw the
general interest deals of BS4 vehicles drop, this prompted an expansion in stock of old (BS4)
vehicles both in bike and four-wheeler portions.
Henceforth many car plants of driving players were shut for barely any days to stop creation,
which prompted loss of occupations of the authoritative workforce. Macroeconomic issues that
additional to this emergency remember the decay for request/utilization both from the country
and metropolitan business sectors, and a liquidity smash in the monetary business sectors.
NBFCs have had a gigantic presentation to vehicle financing in the nation, covering all
portions.
In July 2019, NBFCs financed just about 70 percent of new bikes and 60 percent of new
advertisement vehicles sold in the nation involving Infrastructure Leasing and Financial
Services (IL&FS) and Dewan Housing Finance Ltd (DHFL) which were driving NBFCs. When
IL&FS and DHFL went into money related misery, they sent this virus from the budgetary
administrations area to car part hauling it down.
The Society of Indian Automobile Manufacturers (SIAM) in July 2019 kept in touch with the
legislature of India to take fitting measures to advance progression of credit in the framework
to encourage new vehicle buys. This was underscored to improve liquidity explicitly in the
NBFC part loaning that saw both month to month and quarterly premise defeat in deals and
had even led to conclusion of a couple of businesses.
Let us hope that the Indian automobile industry, which had been accelerating for the last two
decades and has now gone into reverse gear, has seen the worst. But the present global
pandemic with the lockdown, job losses and declining demand casts a spell of gloom for the
industry in the near future.
1.2 Statement of the problem:

The analysis is about understanding the complications caused by Covid in Indian

automotive industry especially for companies like Hyundai and Honda.
It is very important to understand the problems faced by car manufacturing companies due
to pandemic just after they had all their line-up ready with BSVI emission norms.
Automobile manufacturers had to face huge losses during pandemic due to all their
showrooms being shut down for months and inventories been piled up by cars with BSIV
and they had to sell them off as customers would choose BSVI cars over the old cars which
do not comply with latest emission norms.
Hyundai had its product line up ready with BSVI compliant Hyundai Aura, Creta, Grand
i10 Nios, Verna, Venue and Elantra but saw very less buyers due to the pandemic situation
and had to suffer huge losses Honda one other hand had its products ready with cars like
Honda City, Amaze, Jazz, WR-V, Civic and CR-V. Both the manufacturers have tried
various techniques in reviving their profits and have seen positive results from past few
months.
1.3 Objectives:

The following are the objectives of the study

1.To analyse the problems faced by automobile industry.
2.To study the role of pandemic for the setback faced by Hyundai and Honda.
3. To understand the initiatives taken by Hyundai and Honda to regain profits.

1. Automobile industry in India had to face serious issues due to pandemic situation as all
their showrooms were closed and most of the customers were in a state where they
could not choose to buy automobiles at that situation.
2. Automobile manufacturers like Honda and Hyundai struggling hard to set a strong foot
hold in Indian market had to face severe outcomes due to Covid as people would prefer
home grown brands like Tata and Mahindra.
3. Companies came up with various offerings and advertisement campaigns to attract the
customers back to their showrooms and to rejuvenate business opportunities.