Abstract for: Self-Professed Doom: A System Dynamic Investigation in Indian Auto Industry Slowdown

The passenger car segment of Indian Auto Sector has shown a very varied picture of growth over past few years. Its decline has been attributed to various factors related to global meltdown and decline in consumer confidence in popular media and many industry reports like Crisil Research, Kotak Financials etc. However the industry’s continued slump in the post 2009 period has aroused various questions. This work tests the hypothesis of whether the slump was due to endogenous factors of industry and not due to the exogenous factors like interest rate, GDP growth rate etc. The hypothesis has been checked on the publicly available parameters and data sources. This paper develops a causal diagram of the Indian Auto Industry (Passenger Car Segment) to analyze the endogenity in the industry and evaluates the drawn Causal diagram using Vensim ® Software. The modeling approach allows us to better understand the intricacies of the industry and understand the underlying factors which make the sector as unique as it is.