Enhancing Commitment and Reducing Attrition in Indian Automobile Industry

By Kaul, Shivangi; Singh, Abha | International Journal of Education and Management Studies, December 2017 | Go to article overview

Enhancing Commitment and Reducing Attrition in Indian Automobile Industry


Kaul, Shivangi, Singh, Abha, International Journal of Education and Management Studies


"Productivity is never an accident. It is always the result ofa commitment to excellence, intelligentplanning, and focused effort."

-Paul J. Meyer

The automobile Industry contributes 7.1% of India's overall Gross Domestic Product and 13% of India's total excise revenue for the government (India Brand Equity Foundation, nd). Globally it is the 7th largest in the world and employs 29 million people both directly and indirectly (India Brand Equity Foundation, nd). Given the impact of this industry both economically and socially in India, it becomes imperative for organisational psychologist, human resource management researchers and industry experts to examine the challenges and commitment level of individuals working in this Industry. This paper is a result of a larger study done on the commitment of the frontline sales executives of the Indian Automobile Industry. As the paper progresses we will discuss 1) the challenges faced by the Indian automobile industry (rising competition, increasing customer expectation, pressure to optimise costs, stricter emission norms, changing government policies & attrition) 2) recent studies examining the relationship between attrition, commitment and performance 3) implications of the research done by the author on organisational commitment in automobile industry have been discussed and industry specific solutions have been provided on how organisational commitment can be enhanced and how attrition can be reduced 4) future scope of research is discussed based onresearch gaps.

Challenges of the Indian automobile industry

* Increase in competition: The Indian automobile industry has attracted Foreign Direct Investment (FDI) worth US$ 15.79 billion during the period April 2000 to September 2016, according to data released by Department of Industrial Policy and Promotion (India Brand Equity Foundation, n.d). The number of manufacturers selling cars have increased in the last ten years. Statistics also reveal that the total production of automobiles in India has increased phenomenally in the last decade refer figure below (India Brand Equity Foundation, nd).

* Demanding customers and increasing expectation: Today's customers have easy access to information through internet and mobile phones. Escaped Shopper study done by Power (2016) revealed that more and more number of buyers are using internet and media during the buying process. They are well informed about various brands and models available and take market feedback before purchasing a vehicle. They also have a variety of options to choose from. This easy access to information and increase in the number of brands and the options they offer, makes the customer more demanding. They not only expect a good product that matches their requirement but also expect a good sales and after sales experience. Automobile manufacturers and Dealers are now working on ways to delight their customers in every interaction.

* Pressure to optimise costs: Basis the study, commissioned by FADA and conducted by Frost and Sullivan (F & S), between June and December 2013, Ramakrishnan, managing director, South Asia, F&S revealed that expense to revenue ratios for dealers, interest costs and manpower costs have increased (De Souza, 2014) over the years. Car dealers are under constant pressure to reduce costs due to increased financial strain.

* Stricter Emission Norms: In view of the health hazards posed by rising air pollution, supreme court of India has ordered that only those vehicles that are BS 4 compliant should be sold from 1st April 2017 across the country. The court has also asserted that authorities must not register vehicles that are not BS 4 compliant except for those vehicles that were sold on or before 31st March 2017. While this order may be in the interest of larger population, it is likely to pose financial pressure on Indian Dealers and Automobile manufacturers who have a huge inventory of BS 3 complaint vehicles (Parvatha Vardhini, 2017). …

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