The Productivity Analysis of Chennai Automotive Industry Cluster

Abstract

Chennai, also called the Detroit of India, is India’s second fastest growing auto market and exports auto components and vehicles to US, Germany, Japan and Brazil. For inclusive growth and sustainable development, 250 auto component industries in Ambattur, Thirumalisai and Thirumudivakkam Industrial Estates located in Chennai have adopted the Cluster Development Approach called Automotive Component Cluster. The objective is to study the Value Chain, Correlation and Data Envelopment Analysis by determining technical efficiency, peer weights, input and output slacks of 100 auto component industries in three estates. The methodology adopted is using Data Envelopment Analysis of Output Oriented Banker Charnes Cooper model by taking net worth, fixed assets, employment as inputs and gross output as outputs. The non-zero represents the weights for efficient clusters. The higher slack obtained reveals the excess net worth, fixed assets, employment and shortage in gross output. To conclude, the variables are highly correlated and the inefficient industries should increase their gross output or decrease the fixed assets or employment. Moreover for sustainable development, the cluster should strengthen infrastructure, technology, procurement, production and marketing interrelationships to decrease costs and to increase productivity and efficiency to compete in the indigenous and export market.