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Factors Determining Profitability in Indian Automobile Industry

Author

Listed:
  • Dharmaraj Arumugam

    (Associate Professor, Department of Management Studies & Research, Karpagam University (Karpagam Academy of Higher Education), Coimbatore, Tamilnadu, India.)

  • Ashok Kumar M

    (Professor and Head, Department of Management Studies & Research, Karpagam University (Karpagam Academy of Higher Education), Coimbatore, Tamilnadu, India.)

  • Preetha R

    (Assistant Professor, Department of Management Studies & Research, Karpagam University (Karpagam Academy of Higher Education), Coimbatore, Tamilnadu, India.)

Abstract

Automobile sector has emerged as a sunrise sector. In April-March 2015, overall automobile exports grew by 14.89 percent over the same period last year. Passenger Vehicles, Commercial Vehicles, Three Wheelers and Two Wheelers grew by 4.42 percent, 11.33 percent, 15.44 percent and 17.93 percent respectively during April-March 2015 over the same period last year(SIAM). The leading local firms have established over 200 technical cooperation agreements with foreign firms to be able to reach international standards in cost and manufacturing. The healthy development and rapid growth of this industry has always been very important for the Indian economy. This paper aims to measure the profitability and also to analyze the effects of various factors on the profitability in Indian Automobile industry. For this purpose 16 companies were taken and 21 variables were analyzed through multiple correlation analysis and step wise multiple regression. It is proved that profitability of the Indian Automobile Industry is highly dependent on Operating Ratio and it contributes 93.40 per cent to variation in Return on Sales.

Suggested Citation

  • Dharmaraj Arumugam & Ashok Kumar M & Preetha R, 2016. "Factors Determining Profitability in Indian Automobile Industry," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 7(2), pages 64-69, May.
    • Handle: RePEc:aii:ijcmss:v:07:y:2016:i:2:p:64-69
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    References listed on IDEAS

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    1. repec:icf:icfjar:v:11:y:2012:i:2:p:69-90 is not listed on IDEAS
    2. R. N. Agarwal, 1991. "Profitability and Growth in Indian Automobile Manufacturing Industry," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 26(1), pages 81-97, January.
    3. Giulio Bottazzi & Angelo Secchi & Federico Tamagni, 2008. "Productivity, profitability and financial performance," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(4), pages 711-751, August.
    4. Saranga, Haritha, 2009. "The Indian auto component industry - Estimation of operational efficiency and its determinants using DEA," European Journal of Operational Research, Elsevier, vol. 196(2), pages 707-718, July.
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