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Opportunities in Automotive Engineering Services in India

Opportunities in Automotive Engineering Services in India

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www.frost.

com

GIL 2010 : Automotive Track Opportunities in Automotive Engineering Services in India

By Mr. V G Ramakrishnan

1st September 2010

Senior Director, Automotive & Transportation Practice
1

Agenda www.frost.com Opportunities in Automotive Engineering Services in India 1 2 3 4 Engineering Services Market in India – An Overview Challenges Faced by Engineering Service Providers Key Issues to beto add TitleESPs and OEMs Click Addressed by Future of Automotive engineering services in India? 2 .

3 .dedicated export zones (STPIs and SEZs) and an investor-friendly tax policy. it is required to augment its existing capabilities to engage in end-to-end product development initiatives Large engineering base and high on intellectual capital High quality delivery and significant cost benefits Support from Indian Government .com Companies no longer outsource for cost benefits .Preferred Destination for Off shoring Engineering Research and Development Services Reasons – Supply base as the Innovation hub – As the Indian supply base becomes more global and entrenches itself deeply within the customer value chain and plays an integral role in customer strategies.India . reduce time-to-market and to develop localized products for emerging markets .Nasscom India .but to achieve flexible resource capacity.Preferred Destination for Off shoring Engineering Research and Development Services? www.frost.

4 Million Domestic Market $ 348.com $ 1.frost.1 Trillion Global Engineering Services Market 81. Source: Frost & Sullivan 4 .5% $ 209.9% $ 210 Billion Global Automotive Engineering Services Market Global Non-Automotive Engineering Services Market 99. the base year is 2009.1% $ 890 Billion 18.6 Million Export Market Note: All figures are rounded.Engineering Research and Development Scenario – An Overview (2010) www.5 Billion Automotive Engineering Services Market in India 82.24% $ 0.5 Billion Rest of the World 17.76% 0.5% $ 74.

0 210.0 Million Units 62.Is India Underleveraged in Automotive Engineering Services? Production Volumes of Light Vehicles in Global and Indian Market.24% of the total global market 2.frost.0 Global USD Billion Indian Market is 0.0 60.6 0.0 0. 2010 70.0 150.0 10. 2010 www.0 0.0 50.2 Indian Market is 4.0 40.0 100.2% of the total global market 250.0 20.0 200.0 50.com Engineering Services in Global and Indian Market.5 Global India India • Where is the Gap? 5 .0 30.

frost.com • 7-8% of global producti on 6 .How is this Vehicle Growth in India going to impact Indian Automotive Engineering Services Market? www.

Source: Frost & Sullivan 25.0 120.0 20.Why is Engineering Services Market not growing in line with the Vehicle and Auto Components Market? www.0 100. 2010-2020 Auto Components Growth – 18.0 2010 2020 Note: All figures are rounded.0 7 . the base year is 2009.0 40.0 0.0 60.0 Auto component sector to see 4-fold growth by 2020 In USD Billion 80.2% 113.com Forecast of Auto Component Industry (India).frost.

2010-2015 Forecast of Indian Automotive Engineering Services Market – Indian Business (India).0 400. 2010-2015 855.0 100.0 0.0 600.0 2010 2015 8 .0 93.0 75.frost.0 60.0 200.0 2010 423.com Forecast of Indian Automotive Engineering Services Market (India).0 1000.0 80.9 USD Million USD Million 2015 800.0 40.Is Indian Engineering Services – An Export dependent market? www.0 20.0 0.

www.com Where is All this going to culminate? How is it going to benefit the Automotive Engineering Services? 9 .frost.

3% 16.2% 24. Source: Frost & Sullivan 10 .4% Body In White Chassis 11.1% Engine / Powertrain Electrical & Electronics 16. the base year is 2009.com HVAC / Thermal 8.Share of the Wallet of Engineering Services by Program Area www.7% Drivetrain & TRIM Note: All figures are rounded.frost.4% Product Systems 23.

Automotive Engineering Services Industry Structure www.com Subsidiaries Subsidiaries of Indian of Indian OEMs OEMs Engineering Engineering Design Design Firms Firms IT Services IT Services Firm Firm MNC Engg MNC Engg Services Services Firm Firm • • • • • • • • • • AVL IAV Ricardo Magna FEV EDAG KPIT Cummins MIRA IDEA Pinninfina VMs / Auto VMs / Auto Component Component Mfrs Mfrs • GM tech Centre • Daimler Tech Centre • Delphi • Bosch • Visteon • Mahindra Engineering • Tata Technologies • Defiance Technologies • Eicher Engineering Companies Companies • Plexion • Onward Technologies • Neilsoft • Cades • Satyam Ventures • • • • TCS Wipro Infosys Tata Elxi Services Services Simulation Services Only virtual / simulation services provided Only virtual / simulation services provided End to end solutions MNC firms have support of their parent firms to give entire gamut of services End to end solutions Source: Frost & Sullivan 11 .frost.

www. A Small Piece in the Larger Pie? Is Cost Arbitrage the Only USP of Engineering Service Providers in India? 12 .com Is Domestic Market.frost.

www.frost.com Engineering Service Providers Engineering Service Providers Challenges Faced by Availability of Few Domestic Vehicle Manufacturers Establishment of Captives by MNCs Component Mfrs Taking Up Design & Development for OEMs Modularization of Indian Supplier Base 13 .

2009 Passenger Vehicles 80.Availability of Few Domestic Vehicle Manufacturers www.5% of Outsourced Automotive Engineering Services in India is by Passenger Car Manufacturers Market Share of Passenger Car Manufacturers (India).3% Off Highway Vehicles 11.8% 1. Source: Frost & Sullivan 14 . 2009 Tier-1 Companies Comercial Vehicles 6.frost.com Market Share outsourced engineering services by type of vehicle manufacturers (India).5% 80.4% Note: All figures are rounded. the base year is 2009.

2% 30.8% IT Services Firms 10. the base year is 2009.frost.7% Note: All figures are rounded.com Outsourced Engineering Services Market by Nature of the Firm (India).Establishment of Captives by MNCs www.3% Engineering Design Firms 7.0% International Firms 24.0% of the Automotive Engineering business in India is captured by MNC Captives MNC Captives 30. Source: Frost & Sullivan 15 . 2009 Subsidiaries of Indian OEMs 27.

com Specific Reasons for OEMs to Outsource Engineering Activity Engineering Service Providers Lacking Domain Expertise Expansion of OEMs – Impacting the Business of Service Providers Need for OEMs to Outsource to Companies (ESPs) Outside India Cost Arbitrage in India Resulting in Ideal Opportunities for Engineering Service providers Come.Fundamental Issues to be Addressed by ESPs and OEMs www. Let Us Work Together To Achieve Them Through This Exclusive Forum 16 .frost.

com • Five Things That Indian Off shoring Companies Need to Do to Retain Competitiveness • Inhouse / Captive competency of vehicle manufacturers .A threat to Engineering service providers • Role of Engineering services companies in helping the Indian OEMs go global (Round Table Discussion) 17 .frost.Sessions in this Event Aimed to Achieve Ideal Future Strategies www.

frost.com Thank You 18 .www.

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