Cost Structure Analysis of Selected Commercial Vehicle Manufacturing Firms in India



The commercial vehicle arm of the Indian automobile industry is one of the significant
industries which move the wheels of the economy steady. The commercial vehicle manufacturing
firms, of late, have been suffering from the skewed cost structure which increases cost of
production and reduce the profits. The reason for this cost increase might have been attributed
to the cost system’s structural deficiencies which stemmed from misallocation of costs to the
various factors of production and the firms’ failure to rationalize and optimize the cost structure.
In this backdrop, the researcher is interested in analyzing the cost structure of selected
commercial vehicle manufacturing firms in India. The researcher has chosen Ashok Leyland
Limited (ASL), Eicher Motors Limited (EML), Force Motors Limited (FML), Mahindra &
Mahindra Limited (MML), SML Izuzu Limited (SML) and Tata Motors Limited (TML) for the
study by using multi-stage sampling technique. The researcher has sourced data mainly from the
cost records of these firms from the year 2009-10 to 2018-19. The researcher has used Financial
Ratios of Variables of Cost Structure to Sales and Statistical Tools, such as, Mean, Standard
Deviation, Co-Efficient of Variation, Compound Annual Growth Rate and One-Way ANOVA.
The recommendations of the study were: ALL has to take cost control measures to have its cost
of raw-materials consumed and expenses in check to have positive contribution in maximizing
profits, EML has to reduce its depreciation cost through proper maintenance of its fixed assets,
FML has to keep a tab of cost of material consumed so as to have its positive contribution to
sales, MML has to control its depreciation cost and expenses under check to increase profits and
SML and TML has to see that employee cost, depreciation cost and expenses positively
contribute to sales.