Day 58 – Q.1 Analyze the factors responsible for the concentration of automobile industries in certain regions of the world, including the role of labor availability, cost of production, and access to markets and resources.

Analyze the factors responsible for the concentration of automobile industries in certain regions of the world, including the role of labor availability, cost of production, and access to markets and resources.

दुनिया के कुछ क्षेत्रों में ऑटोमोबाइल उद्योगों की एकाग्रता के लिए जिम्मेदार कारकों का विश्लेषण करें, जिसमें श्रम की उपलब्धता, उत्पादन की लागत और बाजारों और संसाधनों तक पहुंच शामिल है।

Approach

A simple straightforward question where candidates need to write about factors responsible for concentration of automobile industries in certain regions of world and role of labour availability, cost of production, and access to markets and resources.

Introduction

The automobile industry is highly concentrated In a few countries with the majority of production taking place in China, the United states,japan,Germany ,and south Korea. and accounts 60 % of world global automobile production,other player include India, Brazil etc. Many factors responsible for their concentration in regions.

Body

There are several factors that can contribute to the development of the automobile industry in a particular region. These include,

Access to natural resources:

• Automobile manufacturing requires large amounts of raw materials, such as steel and aluminum. Regions with abundant natural resources, such as iron and coal deposits, may have an advantage in this regard.

Skilled labor force:

• The automobile industry is highly technical and requires a skilled workforce. Areas with strong engineering and technical education programs may be more likely to develop a robust automobile industry.

Government policies and incentives:

• Government policies and incentives can play a significant role in the development of the automobile industry. For example, governments may provide subsidies for research and development, or offer tax breaks for companies that invest in the industry.

Access to markets:

• The automobile industry is highly globalized, and having access to large domestic and international markets is crucial for the success of the industry.

Economic stability:

• A stable economy with low inflation and steady GDP growth can attract investors and manufacturers to invest in the industry.

Infrastructure:

• Good infrastructure such as highways, ports and airports are necessary for the industry to thrive, as it ensures ease of movement of goods and people.

Innovation:

• Automobile industry is constantly innovating and changing, having research and development centers and companies with forward-thinking approach can be an advantage for a region to have a well-developed automobile industry.

cheap land availability:

• These industries need large tract of land to setup assembly lines, administrative buildings and testing facilities.

Cheap Skilled Labour:

• These industries are capital intensive with high capital investment per ca pita employee. Industry prefers cheap and easy availability of skilled labour and if government initiatives for skill developments are ongoing in an area, then it is also preferred.

Good Quality logistics:

• These industries need supply of accessories such as window glass, tyres, paint etc. And are committed to provide delivery of final product at per-determined time. This requires better connectivity with roads, trucks etc.

Industrial conglomeration:

• When a industry is setup in an area, gradually over time supporting infrastructure is put in place by the authorities. New industrial proposals take advantage of already developed resources and prefer setting up plants in the same area.

Closeness to final customer:

• It is preferred to serve the customer better with reduced transportation cost of the final product and learn the change in their taste to update manufacturing plans.

Closeness of suppliers-

• Industry has to interact with number of OEMs for window glass seats, wipers, tyres etc. If these are at a distance from the manufacturing plant, it will increase the input cost for final product making them less competitive in the market. Hence, closeness is preferred with OEMs. Ex: Manesar and gurgaon.
• Mostly in India we have our auto industries in three clusters namely NCR Chakan and Chennai.
• Auto industry started in India in 1940s with setup of Hindustan and Mahindra and Mahindra.
• After independence, import substitution industrialization was set in place. Monopolistic tendencies were checked by limiting production quota. Ambassador was dominant product and served government.
• Late 1980s saw efforts for more production for example Maruti Udyog whose Maruti 800 captured the market. After 1991, many foreign investors and companies came in the fray and the target is increasingly middle class, urbanizing, daily commuting population of India.
• Rural markets are dominated by two wheels. Indian cars are more focused on low-cost, fuel-efficient products and are exported to various destinations including US, Europe, Africa, etc.
• Many luxury segment cars are in demand in India as well. Domestically, density of cars has increased immensely specially after Nano model of Tata.
• Pollution standards of Bharat stage 4 and 3 are enforced. There is an increased emphasis on adapting electric and hybrid vehicles in near future as well.

Conclusion –

The future of automotive industry will hinge on four major technologies: automation, connectivity, electric power, and the shared economy. Perhaps the most obvious and fundamental change facing the auto sector is the rise of autonomous cars hence there will be some changes in location factors regarding automobile industry.