ECONOMICS OF AUTOMOBILE
ME 76501

Course Objective:

To provide a global view of automobile related industry. To provide down-to-earth knowledge of economics involving automobile as the key component.

1. Economic Management of Road Transport
   (11 hours)
   1. Introduction. Importance of Road Transport, Scope, Economic Function, Government involvement, Future development in Transport Classification of hydropower and end uses
   2. Demand on Road Transport: Factors affecting demand: Land use pattern, Quality of service, Price, Time value, Demand Analysis Introduction of Hydropower plant in Nepal
   3. Costing of Road Transport: Concept of Fixed and Variable costs, Direct and Indirect Costs, Joint and Common Costs, Excapability and opportunity costs, Policy of Nepal Government
   4. Pricing of Road Transport: Cost-Plus Pricing, Pricing policy in imperfect market condition, Marginal Cost Pricing, Subsidy in Transport
   5. Investment Appraisal: Introduction. Conventional investment appraisal, Average rate of return, Payback Period, Discounted Cash Flow, Net Present Valve, Benefit Cost Ratio, Internal Rate of Return
   6. Cost Benefit Analysis: Social cost benefit analysis, hidden Cost, Benefit in transport
   7. Valuation of Cost and Benefits: Shadow Pricing of Market items, Valuation of Time, accidents, environmental costs
2. Road Passenger Transport
   (7 hours)
   1. Introduction. Characteristics of Road Passenger Transport, Capacity, Productivity, Flexibility and economic range of services
   2. Physical Components of Road Passenger Transport
      1. The Way: Differentiation, Taxation
      2. Vehicles: Ranges of Buses, Express Service, Local service, Taxi service, Private Cars.
   3. Legal Requirements for Safe Operation: Licensing, Vehicle Testing, Road Accidents and Implications
   4. Sources of Funds and Investment: Private Sector, Public Sector.
   5. Operational Practices: Scheduling, Revenue Collection and Types of fares, Cartelling
3. Road Freight Transport
   (5 hours)
   1. Introduction. Characteristics of road freight transport. Capacity. Flexibility. Traffic diversity. Economic Range of Service
   2. Physical Components of road freight transport. The Way: Differentiation, Taxation. The Way: Differentiation, Taxation. Vehicles: Designs and Types. Motive Power
   3. Size and Scale of Industry. Historical development. Current size of industry, tonnage and distance. Trend in future development.
   4. Structure and Control of Industry. Private and Public sector. Government agencies. Government involvement and its effects.
   5. Legal Requirements for Operation. Process of Setting up a Road Freight Transport. Licensing of Sectors and permits. Association with Trade Groups. Requirements in Vehicular conditions
   6. Fund for Investment in Industry. Sources. Government subsidy. Depreciation. Costs. Insurance
   7. Operational Practices. Vehicular scheduling and routing. Pricing and marketing. Cost Plus. Average Cost. Marginal Costs
4. Road Traffic Laws
   (4 hours)
   1. Introduction
   2. Evolution of traffic laws
   3. Traffic law in Nepal. Nepal Traffic Rules
   4. International Traffic Rules
   5. Nepal and Internal Driving Licenses
5. Insurance of Motor Vehicles
   (5 hours)
   1. Introduction
   2. Importance
   3. Type
   4. Scope
   5. Players in Insurance Industry
6. Trade and Commerce in Motor Vehicles
   (8 hours)
   1. Introduction
   2. Scope and Size. Sectors
   3. Financial Laws. Banking Regulations
   4. Procedure and regulation for import
   5. Government duties and taxations
   6. Harmonic Codes
7. Stock Management
   (5 hours)
   1. Introduction
   2. Principles, policy and problems
   3. Economic Lots
   4. Demand and supply analysis
   5. Lead time and buffer stock
   6. Concept of zero inventory
   7. Demand forecasting
   8. Systems of stock control
   9. Problems of variety
   10. Stock management of spare parts
   11. Space management

Practical:

Practical means project work and report have to be submitted at the end of the course. The report should be around 20-30 pages plus appendix. Each student shall write report on one each of government and non-government agencies and two commercial enterprises from amongst the topics below.

1. Ministry of Transport
2. Traffic Management Department
3. A bus transport company
4. A road transport company
5. An insurance company
6. An automobile trading company
7. FNCCI
8. Automobile Dealers Association

References:

1. Bell, G., Blackledge, D.A. and Bowen, P., “The economics and Planning of Transport”, Heinemann.
2. Bell, G., Bowen, P., and Fawcett, P., “The Business of Transport”, Macdonald and Evans Ltd.
3. Benson, D., “Elements of Transport Management”, Croners.
4. Fawcett, P., “The road to Transport Management”, Fleetbooks.
5. Lowe, D.,” Road Freight Transport”, Gower.
6. Government and other Publications

Evaluation Scheme:

The questions will cover all the chapters in the syllabus. The evaluation scheme will be as indicated in the table below:

*There could be minor deviation in mark distribution.