Growing Capabilities of Indian Auto Component Industry & Its Sustainability

Automotive Component Manufacturers Association of India

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

1 2 3 4 5 6

India: A Vibrant Economy

Largest Democracy in the world 1.18 billion people 4th largest GDP (PPP) and 11th largest GDP (Nominal) 2nd fastest growing economy (Estimate 2011-12 9%); Indias average
growth rate 7.3% over past 10 years and expected to outpace China in next 10 years

3rd largest investor base in the World Robust Legal and Banking Infrastructure Demographics of Youth 50% under 25 years & 65% under 35 years Rural to Urban Migration - 140 million by 2020; 700 million by 2050 2nd largest pool of certified professionals and highest number of qualified engineers in the world
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The Indian economy poised for Growth...

Real GDP growth rate: India vs. World
10 8 6 Growth (%) 3.6 4 2.9 2 0 1950's -2 -4 1960's 1970's 1980's 1990's 2001-03 2004 2005 2006 2007 2008 2009 -2.2 2010
Estimated

9.2 India World 5.6 4.0 5.2 5.1 5.7 7.9

9.8

9.3 8.2 6.7 7.2

5.4

5.9

5.8 4.3 2.7

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 8.5% GDP Per Capita is US $ 1018 Projected GDP growth in 2011-12 is 9.0%
Source: IMF Apr09, Economic Survey 2008-09 & RBI Bulletin

Growing trade, 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% 103.1 83.5 12% 63.8 52.7 5% -3% 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 0% -5% 10% 15% 21% 124.6 31% 163 182.6 35% 177 30% 25% 20%

In US $ bn

200 150 100 50 0 2002-03 61.4

In US $ bn

27% 149.2 111.5 78.2

22% 181.3 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

Imports(US $ bln)

Growth rate(%)

Exports(US $ Bln)

Growth rate(%)

FDI (In US $ bln)

35 30 25 112% 24.57 185% 33 27.3 200%

FE Reserve (In US $ bln)

300 250 42% 50% 173.1 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 75.4 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 4.2 -16% 3.1 -26% 2.6 5.5 15.7 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, 2010

Exchange Rate & Import Tariff

Exchange Rate is Market Driven & Continued Import Tariff Reduction
Exchange rate (Rs. Vs. 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 -20% -1% 3% 0% -3% -10% 44.9 44.3 45.5 39.5 24% 47 45.6 20%

Exchange rate (Rs.)

Exchange Rate

Import Tariff
16 15 0% 12.5 10 -17% 8.5 -15% -20% 7.5 -5% 0% 0%

Import Tariff (%)

14 12 10 8 6 4 2 0 2004-05

*
-12%

7.5 *

7.5

-10% -15% -20% -25%

* Peak rate 10% * As on April 20, 2010

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11(E)

Import Tariff

Growth rate(%)

Source: Economic Survey 2007-08

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

Contents
1 2 3 4 5 6

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

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

Vehicle production in India

30,000 33,500

3,000 2,500
5,100

22,100

8,700 9,700
2,200

10,230

2,000
In 000 units

1,500 1,000
670

1,100 1,220
540 600 420 200 390 710

940 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- & Threewheelers Tractors Construction equipments*

*Includes backhoes, track excavators, wheeled loading shovels, vibratory rollers and lif tall

Source: SIAM EY study 10

Significant New Capacity Expansion

India A Global Hub for Compact Cars
Maruti Capacity increase 550K Investment $ 800 Mln Hyundai Capacity increase 80k Investment $ 330 mln Tata Motors Capacity 500K Investment $ 240 Mln Toyota Capacity 200K Investment $ 310 Mill. General Motors Capacity increase 225 K Investment $ 500 mln. Nissan-Renault Capacity 400K Investment $ 1 bln. VW Capacity increase 200K Investment $ 1 bln. Honda Capacity 60K Investment $ 250 mln. Ford Capacity increase 80K Investment $ 72 Mill BMW Capacity 10 K Investment $ 40 Mln PSA Capacity 100 K Investment $ 881 Mill

Increased local Increased local sourcing meeting sourcing meeting global expectations global expectations
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Vehicle Production in India

3,500 5,100

8,700-9,700 2,987

30,000 - 33,500 20,974 13,376 1,570-1,750

(000 units)

2,000 1,420

1,618 1,101 799 567 548 CVs 2010 2 Wheelers 2015 (E) 2020 (E) 3 Wheelers 940-1,050 710

500 Passenger Vehicle Tractors

7th largest vehicle manufacturer in the world. Vehicle production in India is expected to grow by 3 fold by 2020 from 2009.
Source: ACMA - EY Vision 2020 12

Contents
1 2 3 4 5 6

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

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Auto Component Industry - 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
8.70 29% 1.69 34% 1.90 33% 3.75 21% 22 20

2005-06
12.00 38% 2.47 46% 2.48 30% 4.40 17% 21 21

2006-07
15.00 25% 2.67 8% 3.60 45% 5.40 23% 24 18

2007-08
18.00 20% 3.52 32% 5.22 45% 7.20 33% 29 20

2008-09
18.40 2% 3.80 8% 6.80 30% 7.30 1% 37 21

2009-10 2010-11(E)
22.00 20% 3.80 8.16 20% 9.00 23% 37 13 30.00 35% 5.00 32% 10.00 23% 10.30 14% 33 17

(Turnover includes supplies to OEMs, aftermarket sales and exports but sans imports. It does not take into account production for captive consumption by OEMs, components manufactured by non ACMA members whose majority supplies are non-automotive and the unorganized sector ) * 2010-11 (H) basis

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Auto Component Industry: Size & Product Range

Turnover
35 30 25 29% 25% 20 15 15 10 5 0 2003-04 2004-05 2005-06 2006-07 2007-08 2% 2008-09 2009-10 2010-11(E) 0% 8.7 6.7 10% 12 18 20% 18.4 20% 20% 22 38%

CAGR: 24%

30 36%

40%

30%

Growth rate (%)

In US$ bn

The Indian auto component industry has an opportunity to tap a potential ~ $ 110 bn by 2020.

Electrical Parts 9% Equipments 10%

Others 7%

Product Range
Engine Parts 31%

Suspension & Braking Parts 12% Body & Chassis 12%

Drive Transmission & Steering Parts 19%

Source: ACMA - EY Vision 2020

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Auto Component Industry Exports & Exports Markets

Exports market size
6.0 42% 5.0 4.0 3.0 2.0 1.2 1.0 0.0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E) 8% 9% 0% 0% 10% 1.7 2.7 20% 3.8 30% 3.8 32% 30% 47% 50% 5 40% 3.5 2.5

CAGR: 23%

Exports market Profile of Exports OEM/Trier-1: 80% Aftermarket: 20%

N.America 24.0% S.America 2.5% Africa 7.4% Asia 28.1%

Growth rate (%)

Australia 1.1%

In US$ bn

Exports could grow 6 fold by 2020 Exports could grow 6 fold by 2020

Europe 36.9%

Source: ACMA - EY Vision 2020

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Auto Component Imports & Sources of Imports

Imports market size
12.0 10.0 8.0 6.0 4.0 2.0 0.0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E) 1.4 1.9 2.5 10% 3.6 50%

CAGR: 32%
33% 31%

45%

45% 8.2 6.8 5.2 30% 20%

10.0 40%

30% 23% 20%

0%

Imports Sources
S.America 0.92% N.America 8.28% Africa 0.20%

Europe 36.03%

Growth Rate (%)

In US $ bn

Asia 54.34%

Australia 0.22%

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Auto Component Industry Investments

Investments
12.0 10.3 10.0 8.0 21%
In US$ bn

40%

CAGR: 18%
7.2 23% 4.4 3.8 2.7 3.1 5.4 17%

33% 7.3

9.0 30% 23% 20% 14% 10% 1% 0%

Growth Rate (%)

6.0 4.0 2.0 0.0 2002-03

17%

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11*

* H1 FY 2010-11

~$ 2.5 bn Investment is expected annually ~$ 2.5 bn Investment is expected annually

Source: ACMA - EY Vision 2020 18

Increased Component Outsourcing from India

Indian Components already Driving on your Roads Indian Components already Driving on your Roads

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Contents
1 2 3 4 5 6

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

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Vision 2020: Domestic Auto Component demand

$ 108 -119 bn
120.0 100.0
17.1

Component wise

Category wise
4.3 6.4 21.3 12.8 4.3 4.3

80.0

In $ bn

$ 69 bn
100.2

10.7 6.4 25.6

60.0 40.0 20.0 0.0

$ 30 bn
60.6 25.7 4.3 2009 8.4 2015(E) Aftermarket OE 12.8 2020(E)

17.1

46.9
23.5

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

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Source: ACMA - EY Vision 2020

Contents
1 2 3 4 5 6

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

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Indian Auto Component Industry Focus: Global Best Practices

562 160 140 120 100 80 60 40 20 0 ISO 9000 TS 16949 ISO 14001 OHSAS 18001 QS 9000 32 208 99 445

Modern shop-floor practices 5-S; 7-W Kaizen TQM TPM 6 Sigma Lean Manufacturing

Deming Award - 12

TPM Award - 15

JIPM - 3

Shingo Silver Medallion - 1

Japan Quality Medal - 1

Largest Deming Prize Award winning companies outside Japan Largest Deming Prize Award winning companies outside Japan
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Some Design & Research Centers in India

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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

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Contents
1 2 3 4 5 6

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

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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 9001:2008

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 Membership
Annual Turnover

< 1 ~ 5 Million US $

231

(More than 600 members)

ACMA membership

> 5 ~ 25 Million US $

194

> 25 ~ 50 Million US $

90

> 50 ~ 100 Million US $

58

> 100 Million US $

46

More than 70% of Companies are SMEs More than 70% of Companies are SMEs
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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

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Become a part of it
7th to 11th January 2012 Pragati Maidan, New Delhi

for any assistance contact

The Capital Court, 6th Floor, Olof Palme Marg, Munirka, New Delhi 110 067 Tel: 011-26160315, Fax: 011-26160317 E-mail: acma@acma.in, Website: www.acmainfo.com

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