INDIAN AUTO COMPONENT INDUSTRY AN OVERVIEW

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

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)

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

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

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 2010-11 is 8.2%
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(E) -20% -1% 3% 0% -6% -10% 44.9 44.3 45.5 39.5 24% 47 44.4 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

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

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

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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 13

Vehicle production in India Segment wise market share

Market share: 2009
SCVs Passenger Vehicle 1% Const. Equip. 17% 0% LCVs 1% M&HCV 2%

Tractors 3%

Two & Three wheelers 76%

Market share: 2015(E)

Tractors 2% Passenger Vehicle Const. Equip. 18% SCVs 0% 2% LCVs 1% M&HCV 1% Two & Three wheelers 76%

Market share: 2020(E)

Tractors 2% Const. Equip. 0%

Passenger Vehicle 21% SCVs 3% LCVs 1% M&HCV 1%

Two & Three wheelers 72%

Source: SIAM EY study

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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

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Indian Automobile Industry-High Growth in all Segments

April-July 2010
(Unit in Nos.)
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. 682,287 898,429 32% 57,324 88,484 145,808 162,721 3,209,740 4,200,556 105,446 118,484 223,930 234,581 4,213,454 5,570,394 84% 34% 54% 44% 31% 33% Exports April-July 2009-10 2010-11 % Gr. 131,308 143,136 9% 5,329 4,858 10,187 37,044 327,381 505,920 7,492 12,404 19,896 89,637 528,794 781,463 41% 155% 95% 142% 62% 54% Sales (Domestic+Exports) April-July 2009-10 2010-11 % Gr. 696,890 899,795 29% 60,318 84,316 144,634 164,517 3,182,891 4,188,932 103,276 117,976 221,252 240,163 4,192,634 5,553,844 71% 40% 53% 46% 32% 33%

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

17

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; 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 $

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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 26.00 18% 5.00 32% 12.00 33% 18

(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 )

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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 8.7 6.7 12 20% 25% 18 18.4

20%

18%

20%

10%

0% 2009-10 2010-11

Growth rate(%)

Source: ACMA - EY Vision 2020

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Auto Component Industry: Product Range

Product Range- 2009
Transm ission & Steering Suspension & 10% Braking 10%

Body & structural 40%

Interior 10%

Engine & Exhaust 20%

Electronics & electrical 10%

Product Range- 2015(E)

Transmission & Steering 13% Body & structural 35%

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 - EY Vision 2020

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Auto Component Industry Exports & Exports Markets

Exports market size (In US $ bln)
6.0 42% 47%

Exports (US $ bn)

CAGR: 21%
3.5 3.8 30% 3.8

50% 40% 32%

5.0 4.0 3.0 2.0 1.0 0.0 2003-04

2.5 1.7 1.2

2.7

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 1.1% N.America 24.0% S.America 2.5% Africa 7.4% Asia 28.1%

Source: ACMA - EY Vision 2020

Europe 36.9%

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Auto Component Industry Imports & Imports Markets

Imports market size (In US $ bln)
10.0 50%
CAGR: 34%

Imports (US $ bn)

45% 31% 3.6

45% 6.8 5.2 30%

8.2 40% 30% 20% 20% 10% 0%

8.0 6.0 4.0 2.0 0.0 2003-04 1.4

33%

1.9

2.5

2004-05

2005-06 Imports

2006-07

2007-08

2008-09

2009-10

Growth rate(% )

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

Europe 36.03%

Asia 54.34%

Australia 0.22%

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Auto Component Industry Investments

Investment (In US $ bln)

14.0 12.0 40%

CAGR: 20%
33% 9.0 21% 17% 4.4 17% 5.4 3.8 23% 7.2 7.3 23%

12.0 33% 30%

Investment (US $ bn)

10.0 8.0 6.0 4.0 2.0 0.0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2.7 3.1

20%

10% 1% 0% 2009-10 2010-11(E)

Investm ents

Grow th rate(%)

Source: ACMA - EY Vision 2020

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Increased Component Outsourcing from India

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

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

26

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

Vision 2020: Domestic market potential for Indian Component Manufacturer

OE vs. Aftermarket
100.0
100.00

Component category wise

$ 76 - 84 bn
80.00 12.63

$ 76 - 84 bn
80.0

In US $ bn

In US $ bn

60.0

$ 49 bn
69.7

60.00

8.42

$ 49 bn
6.39 6.39 4.26 8.52 6.39

6.32 14.74 12.63

40.0

$ 22 bn
42.9 20.0 18.0 0.0 4.0 2009 6.1 2015(E) Aftermarket 10.3 2020(E) OE

40.00

$ 22 bn
2.20 2.20 2.20 4.40 2.20 8.80

20.00

25.26 17.04

0.00 2009 Body & structural Engine & Exhaust Suspension & Braking 2015(E) 2020(E)

Electronics & electrical Interior Transmission & Steering

Source: ACMA - EY Vision 2020

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Vision 2020: Indias Exports Potential

Geography wise
30.00

Component wise
$ 26 - 29 bn
30.00

$ 26 - 29 bn
5.21 0.00 2.71

25.00

4.02
25.00

20.00 12.90

20.00

In $ bn

15.00

In $ bn

15.00

$ 9.4 bn
10.00 1.7

$ 9.4 bn
10.00

12.50

$ 3.8 bn
10.58
5.00 0.80 0.40 0.00 1.60 0.60 0.40 2009 Body & structural Engine & Exhaust Suspension & Braking

1.92 0.85 0.00 5.00 2.08 2020(E)

$ 3.8 bn
5.00 0.42 2.32 1.06 2009 North America

4.2 3.6 2015(E) Western Europe

4.27 1.50 0.85 2015(E)

0.00

0.00

2020(E) Other markets

Electronics & electrical Interior Transmission & Steering

Source: ACMA - EY Vision 2020

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Indias Auto Component Exports potential to North America and Western Europe in 2020

Source: ACMA - EY Vision 2020

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Auto Component Industrys contribution to employment generation and to Indias GDP

Employment in Auto-Component industry
2500

Auto-Component industry contribution to GDP

4.00%

1 to 1.2 million
2000

1,950 2,160

additional jobs

3.00%
000 persons
1500

1,460
1470

920
1000 1040 660 420 2015(E) Direct Indirect 590

2.00% 2.90% 1.00% 2.10%

3.60%

500

260 0 2009

0.00%
2020(E)

2009

2015(E)

2020(E)

Source: ACMA - EY Vision 2020

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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

32

Indian Component Industry Development Capability

During the development process, Tata Motors asked suppliers to think out of the box and innovate products and process design. 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.

Hyundai i20, 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%

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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

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, Capital management, 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 - EY Vision 2020

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Contents
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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

Areas of Cooperation

1.

Global SMEs can invest in green-field manufacturing in India to meet growing domestic demand for auto-components. Opportunities for Partnerships with Indian SMEs at Tier 2/3 level the Next Wave - covering the entire automotive supply chain to address not only product technology, but also Process Technology. Opportunity for supply base discovery. 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.

2.

3. 4. 5.

39

The Addressable Opportunity

Establish Partners/JV in India for - Engine & Exhaust parts - Auto Electronics & Electrical - Transmission & Steering - Informatics & Telematics - New Material - 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

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

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