INDIAN AUTO COMPONENT INDUSTRY AN OVERVIEW

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Contents
1 2 3 4 5 6

About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward

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Introduction
Automotive Component Manufacturers Association of India
Role An apex agency of the Indian Automotive Industry

auto component output in the organized sector

600+ companies forming majority of the

Members

Quality System

ACMA operates on Quality System based on ISO 9001:2000

As Automotive Component Manufacturers Association of India in the year 1982

Re-Christened

Inception In the year 1959 as The All India Automobile & Ancillary Industries Association (AIA & AIA)

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ACMA and Its Services

Promotes Indian Automotive Component Industry

Trade Promotion

Technology Up-gradation

Quality Enhancement

Collection & Dissemination of Information

Vital Catalyst for Industrial Development

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International Business Development Promote India Promote India as a Brand as a Brand Organize Business Organize Business Development Delegation Development Delegation Overseas Overseas Undertake Export Undertake Export Promotional Promotional Projects Projects Organize Participation Organize Participation in Overseas in Overseas Automobile Automobile Exhibitions & Fairs Exhibitions & Fairs Global Interaction Global Interaction through through Counterpart Association Counterpart Association Facilitate potential Facilitate potential Business Partnership of Business Partnership of JV / Strategic Alliance JV / Strategic Alliance Organize Private Organize Private Exhibitions & Exhibitions & Suppliers Conference Suppliers Conference Providing Providing International International Sourcing Forums Sourcing Forums Working closely Working closely with IPOs in India with IPOs in India Dissemination of Dissemination of Export Enquiries Export Enquiries 5 .

Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 6 .

. Economic Survey 2008-09 & RBI Bulletin 7 .2 5.6 4 2.2% Source: IMF Apr’09.1 5.2 2010 Estimated 9.7 7.2 6. Real GDP growth rate: India vs.2 5.9 5.7 7.9 2 0 1950's -2 -4 1960's 1970's 1980's 1990's 2001-03 2004 2005 2006 2007 2008 2009 -2.8 4.7 Slow growing closed economy Fast growing open economy Composition of GDP Services 52% Agriculture 21% Manufacturing 27% Transformation Average Real GDP growth in last 5 year was 8.9 9.3 8. World 10 8 6 Growth (%) 3.6 4.2 India World 5.4 5.5% GDP Per Capita is US $ 1018 Projected GDP growth in 2010-11 is 8.3 2.8 9.The Indian economy poised for Growth..0 5.

2 22% 181. 2010 8 .4 4% 136 142 22% 9% 40% 30% 20% 10% 0% 281 62% 252 274 70% 60% 150% In US $ bn 20 15 10 5 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 4.6 5.7 5% -3% 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 0% -5% 10% 15% 21% 124.5 15.8 52.2 111.3 15% 120 100 80 60 40 20 20% 10% -4% 0% -10% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 0 Imports(US $ bln) Growth rate(%) Exports(US $ Bln) Growth rate(%) FDI (In US $ bln) 35 30 25 112% 24.57 185% 33 27.1 -26% 2.7 56% 100% 50% 21% 11% 0% -50% In US $ bn 200 FDI(US $ bln)# Growth rate(%) FE Reserves* ( US $ bln) # Partly Estimated * As on May 19.1 83.2 -16% 3.1 27% 150 107 100 50 -10% -10% -20% 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Growth rate(%) 2008-09 2009-10 0 75. Investments & Forex reserves… Imports (In US $ bln) 350 300 250 43% 34% 40% 253 291 279 50% 40% 30% Exports (In US $ bln) 200 180 160 140 31% 23% 21% 103.5 12% 63.6 35% 177 30% 25% 20% In US $ bn 200 150 100 50 0 2002-03 61.5 78.3 200% FE Reserve (In US $ bln) 300 250 42% 50% 173.4 In US $ bn 27% 149.Growing trade.6 31% 163 182.

Vs.5 39.5 10 -17% 8. USD) 60 30% 49 50 40 10% 30 20 -4% 10 -13% 0 2004-05 2005-06 2006-07 2007-08 2008-09 Growth rate(%) 2009-10 2010-11(E) -20% -1% 3% 0% -6% -10% 44. 2010 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E) Import Tariff Growth rate(%) Source: Economic Survey 2007-08 9 .Exchange Rate & Import Tariff Exchange Rate is Market Driven & Continued Import Tariff Reduction Exchange rate (Rs.5 * 7.9 44.3 45.5 * -10% -15% -20% -25% * Peak rate 10% * As on April 20.5 -5% 0% 0% Import Tariff (%) 14 12 10 8 6 4 2 0 2004-05 * -12% 7.) Exchange Rate Import Tariff 16 15 0% 12.4 20% Exchange rate (Rs.5 -15% -20% 7.5 24% 47 44.

Demand Drivers and their Impact… Short Term Infrastructure development ($500 billion in the next 5-6 years) Long Term According to McKinsey. the middle class will grow from 50 million to 550 million by 2025 Low penetration rate of Cars (8/1000) Continuously Improving Quality resulting in Export of Automobiles and Auto components Easy access to capital although interest rate is high Low cost of Skilled Manpower & Rapidly growing Design Capability 10 .

Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 11 .

Auto Investments & Their Spread WEST New Hub : Uttaranchal NORTH EAST SOUTH Large number of Indian & Global OEMs across the country Large number of Indian & Global OEMs across the country 12 .

000 In ‘000 units 1.500 5.000 2.200 10.220 540 – 600 420 200 390 710 940 – 1.000 670 1.050 470 – 530 500 150 120 SCVs 2009 360 170 – 190 40 100 0 Passenger vehicles LCVs 2015 (E) M&HCVs 2020 (E) Two.700 2.100 8.100– 1.500 3.& Threewheelers Tractors Construction equipments* *Includes backhoes. vibratory rollers and lif tall Source: SIAM – EY study 13 .700 – 9.Vehicle production in India 30.100 22.000 – 33. track excavators.230 2.500 1. wheeled loading shovels.

17% 0% LCVs 1% M&HCV 2% Tractors 3% Two & Three wheelers 76% Market share: 2015(E) Tractors 2% Passenger Vehicle Const. Equip. 0% Passenger Vehicle 21% SCVs 3% LCVs 1% M&HCV 1% Two & Three wheelers 72% Source: SIAM – EY study 14 . 18% SCVs 0% 2% LCVs 1% M&HCV 1% Two & Three wheelers 76% Market share: 2020(E) Tractors 2% Const.Vehicle production in India – Segment wise market share Market share: 2009 SCVs Passenger Vehicle 1% Const. Equip. Equip.

“INDIA” – A Global hub for Compact Cars New Plant Addition in the Last 1 Year Maruti Capacity 250K Investment US $ 380 mln General Motors Capacity 140K Investment $650 mln Hyundai Capacity Increased to 600K cars Investment US $ 1 billion Nissan-Renault Capacity 400K Investment USD 1 billion Tata Motors Capacity 500K Investment US $ 240 mln VW Capacity 110K Investment US $ 750 mln Toyota Capacity 200K Investment US $ 310 mln Honda Capacity 60K Investment $ 250 mln Ford Capacity 200K Investment US$ 500 mln Increased local content --Creating Global Competence Increased local content Creating Global Competence 15 .

581 4.324 88.634 5.930 234.553. 131.721 3.808 162. 682.276 117. 696.794 781.429 32% 57.044 327.) Category Segm/Subsgmt Passenger Vehicles ( PVs ) M&HCVs LCVs Commercial Vehicles (CVs) Three Wheelers Two wheelers Grand Total Production April-July 2009-10 2010-11 % Gr.187 37.891 4.844 71% 40% 53% 46% 32% 33% 16 .318 84.188.329 4.446 118.394 84% 34% 54% 44% 31% 33% Exports April-July 2009-10 2010-11 % Gr.795 29% 60.192.Indian Automobile Industry-High Growth in all Segments April-July 2010 (Unit in Nos.484 145.740 4.316 144.136 9% 5.252 240.200.381 505.287 898.637 528.556 105.308 143.920 7.463 41% 155% 95% 142% 62% 54% Sales (Domestic+Exports) April-July 2009-10 2010-11 % Gr.896 89.484 223.976 221.209.492 12.517 3.858 10.634 164.570.163 4.890 899.454 5.404 19.213.182.932 103.

Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 17 .

7-W • Kaizen • TQM • TPM • 6 Sigma • Lean Manufacturing Annual Turnover in Million US $ ACMA membership (More than 600 members) 245 179 82 51 46 < 1 ~ 5 Million US $ > 5 ~ 25 Million US $ > 25 ~ 50 Million US $ > 50 ~ 100 Million US $ > 100 Million US $ 18 .Indian Auto Component Industry Focus: Global Best Practices Significant number of companies with Quality certifications & recognition: • ISO 9000 : 552 • TS 16949 : 438 • QS 9000 : 33 • ISO 14001 : 204 • OHSAS 18001: 95 • JIPM: 3 • Deming Award : 11 • TPM Award : 15 • Japan Quality Medal : 1 • Shingo Silver Medallion : 1 Industry fast embracing modern shop-floor practices: • 5-S.

00 33% 18 (Turnover includes supplies to OEMs.40 2% 3.00 32% 12.40 17% 21 21 2006-07 15.47 46% 2. components manufactured by non ACMA members whose majority supplies are non-automotive and the unorganized sector ) 19 . aftermarket sales and exports but sans imports.20 33% 29 20 2008-09 18.40 23% 24 18 2007-08 18.80 8.22 45% 7.00 25% 2.00 38% 2.69 34% 1.Statistics (Value in US $ Billion) E -> Estimated 2004-05 Turnover Growth rate(%) Export Growth rate(%) Imports Growth rate(%) Investment Growth rate Imports as % of Turnover Exports as % of Turnover 8.75 21% 22 20 2005-06 12. It does not take into account production for captive consumption by OEMs.00 20% 3.48 30% 4.30 1% 37 21 2009-10 2010-11(E) 22.00 18% 5.Auto Component Industry .00 20% 3.00 23% 37 13 26.52 32% 5.60 45% 5.16 20% 9.80 8% 6.70 29% 1.90 33% 3.80 30% 7.67 8% 3.

EY Vision 2020 20 .7 6.4 20% 18% 20% 10% 0% 2009-10 2010-11 Growth rate(%) Source: ACMA .7 12 20% 25% 18 18.Auto Component Industry: Size Turnover (In US $ bln) 30 Turnover (US $ bn) 38% 40% CAGR: 21% 22 26 30% 25 29% 20 15 15 10 5 0 2003-04 2004-05 2005-06 2006-07 2007-08 2% 2008-09 8.

Auto Component Industry: Product Range Product Range.2015(E) Transmission & Steering 13% Body & structural 35% Product Range.EY Vision 2020 21 .2009 Transm ission & Steering Suspension & 10% Braking 10% Body & structural 40% Interior 10% Engine & Exhaust 20% Electronics & electrical 10% Product Range.2020(E) Transmission & Steering 16% Suspension & Braking 11% Body & structural 31% Suspension & Braking 13% Interior 9% Engine & Exhaust 17% Electronics & electrical 13% Interior 8% Engine & Exhaust 18% Electronics & electrical 16% Source: ACMA .

8 30% 3.4% Asia 28.9% 22 .8 5 50% 40% 32% 5.2 2.1% N.America 2.0 3.5% Africa 7.0 1.1% Source: ACMA .0% S.0 2003-04 2.5 1.7 1.0 0.Auto Component Industry – Exports & Exports Markets Exports market size (In US $ bln) 6.0 42% 47% Exports (US $ bn) CAGR: 21% 3.5 3.EY Vision 2020 Europe 36.America 24.7 30% 20% 8% 9% 0% 10% 0% 2004-05 2005-06 2006-07 Exports 2007-08 2008-09 2009-10 2010-11(E) Growth rate(%) Exports market Profile of Exports OEM/Trier-1: 80% Aftermarket: 20% Australia 1.0 4.0 2.

0 2.92% N.0 50% CAGR: 34% Imports (US $ bn) 45% 31% 3.Auto Component Industry – Imports & Imports Markets Imports market size (In US $ bln) 10.2 30% 8.6 45% 6.0 2003-04 1.9 2.4 33% 1.0 0.0 6.8 5.America 0.20% Europe 36.0 4.America 8.34% Australia 0.2 40% 30% 20% 20% 10% 0% 8.28% Africa 0.5 2004-05 2005-06 Imports 2006-07 2007-08 2008-09 2009-10 Growth rate(% ) Imports market S.03% Asia 54.22% 23 .

4 17% 5.0 12.0 2.Auto Component Industry Investments Investment (In US $ bln) 14.0 33% 30% Investment (US $ bn) 10.8 23% 7.0 6.7 3.0 8.3 23% 12.0 4.0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2.0 21% 17% 4.1 20% 10% 1% 0% 2009-10 2010-11(E) Investm ents Grow th rate(%) Source: ACMA .2 7.EY Vision 2020 24 .0 40% CAGR: 20% 33% 9.4 3.0 0.

Increased Component Outsourcing from India Indian Components already Driving on your Roads… Indian Components already Driving on your Roads… 25 .

Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 26 .

3 4.1 Component wise Category wise 4.1 46.Vision 2020: Domestic Auto Component demand $ 108 -119 bn 120.7 6.EY Vision 2020 .4 25.3 80.9 23.0 100.3 12.3 2009 8.8 4.0 In $ bn $ 69 bn 100.3 6.6 60.6 25.0 40.0 20.7 4.8 2020(E) 17.0 17.2 10.4 2015(E) Aftermarket OE 12.0 0.4 21.0 $ 30 bn 60.5 2020(E) Transm ission & Steering Suspension & Braking Interior Engine & Exhaust Electronics & electrical Body & structural 2020(E) Construction Equipments Farm Equipments 2 & 3 Wheelers HCV LCV SCV Passengers cars 27 Source: ACMA .

0 0.0 2009 6.20 2.00 Component category wise $ 76 .74 12.0 $ 49 bn 69. Aftermarket 100.80 20.04 0.32 14.00 $ 22 bn 2.0 $ 22 bn 42.0 In US $ bn In US $ bn 60.0 18.39 6.52 6.1 2015(E) Aftermarket 10.0 100.40 2.39 6.00 8.00 2009 Body & structural Engine & Exhaust Suspension & Braking 2015(E) 2020(E) Electronics & electrical Interior Transmission & Steering Source: ACMA .00 12.84 bn 80.63 $ 76 .20 4.3 2020(E) OE 40.0 4.26 17.7 60.20 8.9 20.Vision 2020: Domestic market potential for Indian Component Manufacturer OE vs.EY Vision 2020 28 .26 8.39 4.84 bn 80.00 25.20 2.42 $ 49 bn 6.63 40.

71 25.00 0.32 1.00 1.85 2015(E) 0.00 20.00 2.00 1.00 4.29 bn 30.02 25.Vision 2020: India’s Exports Potential Geography wise 30.6 2015(E) Western Europe 4.7 $ 9.00 2020(E) Other markets Electronics & electrical Interior Transmission & Steering Source: ACMA .00 Component wise $ 26 .27 1.40 0.60 0.50 0.06 2009 North America 4.00 12.00 0.4 bn 10.EY Vision 2020 29 .8 bn 10.40 2009 Body & structural Engine & Exhaust Suspension & Braking 1.21 0.00 12.00 $ 9.2 3.00 In $ bn 15.58 5.08 2020(E) $ 3.4 bn 10.80 0.92 0.00 $ 26 .00 5.00 0.00 In $ bn 15.85 0.29 bn 5.42 2.50 $ 3.8 bn 5.00 2.60 0.90 20.

India’s Auto Component Exports potential to North America and Western Europe in 2020 Source: ACMA .EY Vision 2020 30 .

460 1470 920 1000 1040 660 420 2015(E) Direct Indirect 590 2.00% 2.60% 500 260 0 2009 0.00% ‘000 persons 1500 1.00% 2020(E) 2009 2015(E) 2020(E) Source: ACMA .00% 1 to 1.2 million 2000 1.160 additional jobs 3.90% 1.00% 2.950 – 2.10% 3.EY Vision 2020 31 .Auto Component Industry’s contribution to employment generation and to India’s GDP Employment in Auto-Component industry 2500 Auto-Component industry contribution to GDP 4.

Contents 1 2 3 4 5 6 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 7 32 .

This approach has resulted in 37 patents being filed to cover innovations in the car and has given Indian Engineers a canvas to showcase their skills and capabilities. Tata Motors asked suppliers to think out of the box and innovate products and process design. Made in India with European Design feel” Hyundai exported 286K cars last year with a focus on Europe Indigenization levels for high volume cars are at 80-90% 33 .Indian Component Industry Development Capability During the development process. “Hyundai i20.

Some Design & Research Centers in India 34 .

Challenges India is Committed to Address 1 2 3 4 5 6 7 Infrastructure Deficit Talent Crunch Scaling-Up the industry Access to World-class Technology and Quality Practices Remaining cost competitive Access to and availability of cost-effective capital Trade Policy 35 .

Risk management Enabling Capabilities IT systems focused mainly at product design and development Raising risk capital Cash flow management Managing risk of launching innovative products People and organization Innovative recruitment techniques to attract talent Talent retention Source: ACMA . Capital management.EY Vision 2020 36 .Capabilities of successful niche Component Manufacturers Core Capabilities Design. engineering & validation Manufacturing Sales & marketing Strong R&D focus on specific pdts./technology Customized solution Innovation management Domestic manufacturing footprints Operating smaller plants efficiently Customer acquisition Customer loyalty management Information technology.

Contents 1 2 3 4 5 6 7 About ACMA Indian Economy Automotive Industry Auto Component Industry of India Vision 2020 Capabilities & Challenges of Component Suppliers The Way Forward 37 .

Areas of Cooperation • • • • • Manufacturing Technology Research & Development Quality Environment 38 .

Opportunity for Strategic Alliance to cover Global customers Joint R&D with Indian companies for new product development and designing is also an attractive proposition. but also “Process Technology”. Opportunities for Partnerships with Indian SMEs at Tier 2/3 level – the Next Wave . 39 . Global SMEs can invest in green-field manufacturing in India to meet growing domestic demand for auto-components.covering the entire automotive supply chain to address not only product technology. 3.Areas of Cooperation 1. 4. 5. Opportunity for supply base discovery. 2.

Transmission & Steering .Engine & Exhaust parts .The Addressable Opportunity… • Establish Partners/JV in India for .Simulation Technology • • • • Collaboration for Manufacturing Excellence and Process Design Production Sharing in India & Europe for a Holistic Service Capability Partnering for Global Requirements Merger & Acquisition 40 .Auto Electronics & Electrical .Informatics & Telematics .New Material .

Conclusion • • • • • • • Vibrant Indian Economy Automotive Industry showing double digit growth in all segments India becoming Global and Regional hub or lead country for vehicle programmes Vision 2020 Growing engineering and IT capability for manufacturing Auto Component Industry :Culturally compatible-Quality. Experience and Values Opportunity to partner in product & process innovation India ::A Gateway to Growth India A Gateway to Growth 41 .

6th Floor.in Website: www. 26175873.ACMA Head Office The Capital Court.com 42 .acmainfo. Olof Palme Marg. New Delhi – 110 067 Tel: 011-26160315. Munirka. 74 Fax: 011-26160317 E-mail: acma@acma.

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