Macro and micro economics analysis Research Paper

Macro and micro economics analysis - Research Paper Example Toyota Camry is one of the popular cars that are being manufactured by Toyota. The car is available in global market in two classes, such as Narrow-Body; Compact class and Wide-Body; Mid-Size class. The car under these segments has achieved huge fame since its establishment in the year 1982. Indian car industry is very much potential and year after year the demand of cars is increasing significantly. The target audience of Toyota Camry in Indian market is the people who are highly educated and enjoys high living standard. Both men and women over 30 years of age are the key target consumer of this particular product. Indian automotive and car market is highly potential and competitive enough. Maruti Suzuki, Hyundai Motors, Tata Motors, Ford Motors and Mahindra and Mahindra are the major competitors of Toyota in Indian market (Kotler, 2009). Maruti Suzuki is the leading player within the Indian Vehicle industry according to the market share figure 2010 (Figure 1). Microeconomics Market Mechanism: Demand and Supply Considering the market mechanism in India, historical facts help us to understand the Indian market. India started manufacturing automobile after 1947. Before Independence in the times of 1920, the Maharajas possessed cars especially of Rolls Royce as their status symbols. With time after independence, the need for a people’s car evolved and the middle class families also started to own cars. Initially the indigenous automobile companies captured the majority of market share but with the liberalization in government policies, the foreign automobile giants like Toyota started to invest in the Indian market. For launch of Toyota Camry, Toyota can look at the positive indicators of Indian market which indicates that the Indian car market is the fourth largest in the continent of Asia and stands out as the fifth largest manufacturer of commercial vehicles. The price elasticity of demand and supply in the Indian market are the key factors that Toyota would need to consider before the launch of Toyota Camry. It is to be kept in mind that the cars in India are considered as a luxury product. Also the Indian market consists of consumers ranging from lower class to lower middle class to middle class to upper class. Thus various sections of the society according to their levels of income make the Indian car market a mixed bag. Thus the price of cars in Indian car market is a significant factor as market responses largely vary with respect to changes in the car price. With unit changes in price of the cars, the demand of the cars in India would decrease and the supply of cars in India would fall. Thus the price elasticity of demand and supply for cars in India is greater than 1 showing the demand and supply id highly elastic with respect to price of cars in India. Also the rise in price of related goods of car like petrol, diesel also affects the demand and supply of cars in India. Thus the factor of cross-elasticity of indirect goods like petrol is also present in the Indian car market. The income elasticity on demand and supply in the Indian car market also needs to be considered for the launch of Toyota Camry. The factors of production for Toyota Camry with respect to its launch in the Indian market include an analysis of the demand and supply of the car market in India. The Indian car market was de-licensed in 1991 with the gates in automobile sector opened for 100% investment by the foreign