Chapter 1 Introduction 1 Chapter 1 Introduction 1.1 India after Liberalization (After 1991) In the year1991, the new economic policy was announced by the Government of India. The economic reforms of 1991 abolished Industrial Licensing. This was done to remove the bottlenecks in the Industrial production. In case of steel and cement there was a rise in production in the post reform period. The reforms allowed foreign direct investment and encouraged free market economy. The LPG (Liberalization, Privatization and Globalization) policy has given a wider scope for enhancement of the secondary and tertiary sector. After the year 1991 gradually the areas which were reserved for the public sector unit, opened to foreign investment. Also foreign direct investments were allowed in certain priority sectors. LPG model of economic development emphasizes a larger role for the private sector than the public sector units. The policies were formulated to make India a favored destination for foreign investment. The policies were such to make India more of an export economy. Also the policies superseded an agrarian economy to move towards an Industrial and service sector economy. There was a shift from a saving economy to a spending economy. The needs of the customers also changed. At the same time there was a rise in the Information Technology 2 sector and Automobile sector. The reforms led to a higher growth rate. The GDP growth rate was 5.2% between 1980-81 and 1990-91. It was 5.6% in 1990-91 to 2000-01. The GDP increased to 7.6% between the years 2000-01 to 2006-07. Growing Automobile sector The potential Passenger Car market (Four wheelers) in India is the second largest in the world and likely to grow at a fast rate. If the car ownership in the western world is compared with that of India, in the USA the ratio is 842 per 1000 as of 2007 while in India it is only 12 per 1000 as of 2007. In the year 2007 in developing countries the ratio of car ownership is as follows in table 1.1. Table 1.1 Sr. Name of the No of No Country vehicles per 1000 people 1 Brazil 156 2 Russia 213 3 India 12 4 China 128 5 Morocco 53 6 Honduras 11 7 Sri Lanka 25 8 Egypt 30 9 Pakistan 08 10 Peru 44 (Source: www.nation master.com) 3 The majority of established car makers globally have already set up base (MarutiSuzuki, Hyundai General Motors, Mercedes Benz, Fiat, Volkswagen and Nissan), to take advantage of the opportunities of the world‟s largest four wheeler market. The engineering of the TATA Nano as the world‟s cheapest car hitherto considered impossible has opened up a new segment in the year 1999. Before 1985 there were only two or three brands in India viz; Ambassador,Premier Padmini and the Standard. In the post liberalization period a number of foreign players entered in the market via the Joint venture route. In 1998 after the launch of the TATA Indica an Indian car manufacturer, the market really picked up steam. Since 1998 the Indian consumer has become more sensitive to what the competition has to offer and because of the increased purchasing power has a wide range of products to choose from. Also there is increased awareness regarding the Quality features and the price of the product. More Demand in Metropolitan Cities The consumer preferences in rural and urban India are different as the preferences, income level and infrastructure are different. With the growth in the IT Sector and disposable income the aspirations of the urban young to own a four wheeler have also increased. Due to poor and uncomfortable public transport systems, customers with high disposable income prefer to use own four wheeler. Along with this in the Metropolitan cities, there was a growth in the service sector. E.g. Mumbai is a hub for the 4 financial sector or Bangalore is an IT hub. People were drawn to these cities for better opportunities and better income. Due to longer distances in the Metropolitan cities, owning a car is a prime necessity. It is also considered as a status symbol. Fig 1 India Map PUNE CITY 5 Maharashtra Map Fig 2 Pune District Map Fig 3 6 Fig 4 Pune City Map Pune District Pune (District) is situated in the state of Maharashtra. Pune city is the district headquarters. In the most recent census on 2011, the total population of the district was 9,426,959, making it the fourth most populous district in India. Urban population comprises 58.08% of the total population. The current population of Pune urban agglomerate is over 5 million. Pune City in the State of Maharashtra; Becoming an Auto Hub Pune is situated in the Western part of the state of Maharashtra. Pune is the ninth most populous city in India and the second largest in the state of Maharashtra after the state capital city of Mumbai. Pune is also the 101st largest city in the world, by population. 7 It is situated 560 metres (1,837 feet) above sea level on the Deccan Plateau, on the right bank of the Mutha river. Pune city is the administrative headquarters of the Pune district and was once the centre of power of the Maratha Empire established by Shivaji Maharaj. Pune is considered the cultural capital of Maharashtra. Since the 1950s and 1960s, Pune has a traditional old- economic base. Most of the old industries continue to grow. The city is also known for its manufacturing and automobiles industries, as well as for research institutes of information technology(IT), education, management and training, which attract migrants, students, and professionals from India, South East Asia, the Middle East, and Africa. Pune is also one of the fastest growing cities in the Asia Pacific region. The „Mercer 2015 Quality of Living rankings‟ evaluated local living conditions in more than 440 cities around the world where Pune ranked at 145, second in India after Hyderabad (138) It also highlights Pune among evolving business centers and emerging 9 cities around the world with citation "Hosts IT and automotive companies". The Kirloskar group was the first to bring industry to Pune by setting up Kirloskar Oil Engines Ltd. in 1945 at Kirkee in Pune. The Group was originally set up in Kirloskarwadi, Kirloskar Brother‟s Ltd (India's largest manufacturer and exporter of pumps and the largest infrastructure pumping project contractor in Asia), Kirloskar Oil Engines (India's largest diesel engine company), Kirloskar Pneumatics Co. Ltd., and other Kirloskar companies are based in Pune. This 8 was followed by Hindustan Antibiotics and Tata Motors Ltd in the 1960‟s and 1970‟s. ”Pune has metamorphosed into a cosmopolitan city. It is known as the Oxford and Detroit of the East. Pune is the cultural capital of Maharashtra and education hub and at the same time is at par with any modern city in India, with westernized influence. Pune has a varied mix of industries and one of the major automobile as well as IT hub in India. Pune has the highest number of software companies in India 212 followed by Banglore 208 and Hyderabad 97. Hence it is called as the “Silicon Valley of Maharashtra. Pune is the only city in India where there are seven Universities. Savitribai Phule Pune University is the epitome of knowledge and hence Pune city has inherited the name Oxford of the East. Pune also is a center of government offices and bodies of national and international stature. Viz. NCL, DRDO, NDA, NCCS, CIRT, NIV, IAUCCA, ARDE.and also home to major defense installations. Hence the consumers in Pune have high cultural values, they are knowledgeable and matured. They are well informed consumers. People from different parts of India are migrating to Pune for better job prospects. Pune has only 28% local people(i.e. Marathi). Hence a true cosmopolitan city with around 15% North Indians, 10% Tamilians, 12% Telguites, 10% Keralite, 8% Foreigners (Koregoan Park), 12% Bengalis and 5% a mixture of all. Now Pune has grown into a major Industrial hub. 9 Therefore the study intends to investigate consumers in Pune Industrial belt, as it would represent the fairly modern, urban Indian society. Definitions and Meanings Passenger Cars :A passenger car is a road motor vehicle, other than a motor cycle, intended for the carriage of passengers and designed to seat no more than nine passengers. The term "passenger car" therefore covers micro cars (need no permit to be driven), taxis and hired passenger cars, provided that they have fewer than ten seats. This category may also include pick-ups. Classification: Cars may be classified by a number of different criteria and objectives. However, comprehensive classification is elusive, because a vehicle may fit into multiple categories, or not completely satisfy the requirements for any. This article details the commonly used classifications and definitions. There are numerous ways of categorizing passenger vehicles. Where applicable, the equivalent Euro NCAP classifications are also used. Numerous jurisdictions establish vehicle classification systems for tax purposes according to their construction, engine, weight, type of fuel and emissions, as well as the purpose for which they are used. Microcars : Straddling the boundary between car and motorbike, these vehicles have engines under 1.0 liter, typically seat only two passengers, and are sometimes unorthodox in construction. Some micro cars are three- 10 wheelers, while the majority have four wheels. Micro cars were popular in post-war Europe, where their appearance led them to be called Bubble Cars”. More recent micro cars are often electric powered.