A Comprehensive Analysis of Factors Influencing Investment Decisions in the Automobile Industry

Dr. Smruti Vakil

Abstract: Introduction: The automobile sector is one of the fastest-growing industries in India, contributing 7.1% to GDP (2016?17). Rising middle-class income, favorable policies, and a youthful population have driven demand. However, events like demonetization and GST implementation temporarily slowed sales and investments. Literature Review: Studies by Amima Shoeb (2017), Bureau (2018), and Chandrashekhar (2017) highlight India?s automotive evolution through liberalization, FDI inflows, and growth of major firms such as Maruti Suzuki, Hyundai, Tata Motors, and Mahindra. Despite policy shocks, the sector remains a strong investment avenue due to domestic demand and structural reforms. Methodology: An analytical research design was used with secondary data from annual reports and journals. A sample of five firms-Tata Motors, Ashok Leyland, Eicher Motors, Force Motors, and SML Isuzu-was selected using systematic random sampling. Techniques included equity, technical, and regression analysis. Findings: Equity analysis showed strong performance by Ashok Leyland and Eicher Motors in the LCV/HCV segment. Sales for all companies declined in 2016?17 due to demonetization and GST. Technically, Tata Motors, Force Motors, and SML Isuzu trended downward, while Ashok Leyland and Eicher Motors moved upward. EPS fell sharply for Tata Motors (?21.95) but increased for peers. Regression results revealed that infrastructure significantly affects investment (p = 0.012), while raw material prices, GDP, petrol prices, and interest rate showed no significant link. Overall, these factors explained 50.9% of investment variation (Adjusted R? = 0.509). Conclusion: The automobile sector continues to offer strong long-term potential supported by infrastructure growth and policy reforms, despite short-term shocks. Strategic investments in efficient and adaptive firms can yield sustainable returns.

Keywords: Automobile Industry, Investment, Infrastructure, GDP, FDI, EPS, India, Regression Analysis

How to Cite?: Dr. Smruti Vakil, "A Comprehensive Analysis of Factors Influencing Investment Decisions in the Automobile Industry", Volume 14 Issue 10, October 2025, International Journal of Science and Research (IJSR), Pages: 1483-1487, https://www.ijsr.net/getabstract.php?paperid=SR251027164652, DOI: https://dx.doi.org/10.21275/SR251027164652