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Automotive industry in India

From Wikipedia, the free encyclopedia

Mahindra Scorpio, one of India's best selling indigenously developed SUV.

Foreign carmakers have built plants in India.

The Automotive industry in India is one of the largest in the world and one of the fastest growing globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year.[1] It is the world's second largest manufacturer ofmotorcycles, with annual sales exceeding 8.5 million in 2009.[2] India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010.[3] According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12.[4] In 2009, India emerged asAsia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.[5] As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world.[6][7] According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by

2015 and more than 9 million by 2020.[8] By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.[9] A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India"[10] with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports.[11] Gurgaon and Manesar in Haryana are hubs where all of theMaruti Suzuki cars in India are manufactured.[12] The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda,Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors[13][14]having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again withGeneral Motors, Aurangabad with Audi, Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.[15][16][17]

1 Overview 2 History 3 Industry Definition 4 Supply Chain of Automobile Industry 5 Key statistics

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5.1 Automobile Production 5.2 Automobile Sales 5.3 Automobile Exports 5.4 Product and service segmentation 5.5 Vehicle Registration 5.6 Total Number of Vehicle Registrations in India from 2001 to 2008

6 Emission norms 7 Geographic Segmentation

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7.1 Geographical Segmentation:State-wise motor vehicles registration in India from 2001 - 2008 7.2 Geographical Segmentation: Category-wise number of registrations in States of India 7.3 Geographical Segmentation: Category-wise registration in Union Territories of India

8 Exports

8.1 Top 20 Export destinations in 2007-2008 and growth from previous year

9 Passenger vehicles in India

o o

9.1 Indian automotive companies 9.2 Foreign automotive companies in India


9.2.1 Vehicles manufactured or assembled in India 9.2.2 Vehicles brought into India as CBUs

10 Commercial vehicle manufacturers in India

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10.1 Indian brands 10.2 Joint Venture Brands 10.3 Foreign brands

11 Electric car manufacturers in India 12 Market Characteristics 13 International Markets 14 International Markets Analysis 15 Basis of Competition 16 Life Cycle 17 Industry Conditions 18 Taxation 19 MODVAT and CENVAT 20 Customs Duty 21 Service Tax 22 Capital and Labour Intensity 23 Industry Volatility 24 Key Competitors

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24.1 Tata Motors 24.2 Maruti Suzuki India 24.3 Hyundai Motor India 24.4 Mahindra & Mahindra 24.5 Ashok Leyland 24.6 Hero Honda Motors 24.7 Bajaj Auto

25 Key Factors 26 Key Success Factors

27 Further reading 28 Footnotes


The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year.[18] The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%.[18] Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes.[18] The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people.[18] The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.[18] The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more

competitive. Over the past few years, the industry has been volatile. Currently, Indias increasing per capita disposable income which is expected to rise by 106% by 2015[18] and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%.[18] Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%.[18] Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26%[18] of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles.

The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers. Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A

utility vehicles under license from Willys.[19] The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.[20] Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due tonationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.[21] In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.[21] Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers.[22] In February 2009, monthly sales of passenger cars in India exceeded 100,000 units[23] and has since grown rapidly to a record monthly high of 182,992 units in October 2009.[24] From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example [25]) this progression is unlikely to stop in the coming decade.[26] Congestion of Indian roads, more than market demand, will likely be the limiting factor.[27] SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and international, in India.[28]


This class consists of units mainly engaged in manufacturing motor vehicles or motor vehicle engines. Products and Services The primary activities of this industry are: Motor cars manufacturing Motor vehicle engine manufacturing The major products and services in this industry are: Passenger motor vehicle manufacturing segment (Passenger Cars, Utility Vehicles & Multi Purpose Vehicles) Commercial Vehicles (Medium & Heavy and Light Commercial Vehicles) Two Wheelers Three Wheelers

Chain of Automobile Industry

The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminium to the second tier suppliers. Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order to provide black-box solutions for the requirements of their customers. Black-box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of secondtier suppliers.

Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers wants and needs, automakers begin designing models which are tailored to consumers demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki,Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies. Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorised dealers of the companies. The dealers then sell the vehicles to the end customers. Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers.


The production of automobiles has greatly increased in the last decade. It passed the 1 million mark during 2003-2004 and has more than doubled since.[29]
Year 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Car Production 2,814,584 2,175,220 1,846,051 1,713,479 1,473,000 1,264,000 1,178,354 907,968 703,948 654,557 517,957 533,149 Year Motor Vehicle Production Industry Revenue
[18] [18]

% Change 29.39 17.83 7.74 16.33 16.53 7.27 29.78 28.98 7.55 26.37 -2.85

Commercial 722,199 466,330 486,277 540,250 546,808 362, 755 332,803 253,555 190,848 160,054 283,403 285,044

% Change 54.86 -4.10 -9.99 -1.20 50.74 9.00 31.25 32.86 19.24 -43.52 -0.58

Total Vehicles Prodn. 3,536,783 2,641,550 2,332,328 2,253,999 2,019,808 1,628,755 1,511,157 1,161,523 894796 814611 801360 818193

% Change 33.89 13.25 3.35 10.39 19.36 7.22 23.13 22.96 8.96 1.62 -2.10

2004-2005 8,467,853 24,379

2005-2006 9,743,503 26,969

2006-2007 11,087,997 30,507

2007-2008 10,853,930 32,383

2008-2009 11,175,479 33,342*

Exports (Units)[18] Exports (Revenue)


629,544 1,915

806,222 2,231

1,011,529 2,552

1,238,333 3,008

1,530,660 3,718*

[edit]Automobile Type of Vehicle Passenger Vehicles

[18] [18]

2005-2006 1,209,876 353,703 374,445 6,529,829 8,467,853 2006-2007 1,309,300 391,083 434,423 7,608,697 9,743,503 2007-2008 1,545,223 519,982 556,126 8,466,666 11,087,997 2008-2009 1,777,583 549,006 500,660 8,026,681 10,853,930 2009-2010 1,838,697 417,126 501,030 8,418,626 11,175,479

Commercial Vehicles Three Wheelers Two Wheelers Total



[edit]Automobile Type of Vehicle Passenger Vehicles

[18] [18]

2004-2005 1,061,572 318,430 307,862 6,209,765 7,897,629 2005-2006 1,143,076 351,041 359,920 7,052,391 8,906,428 2006-2007 1,379,979 467,765 403,910 7,872,334 10,123,988 2007-2008 1,549,882 490,494 364,781 7,249,278 9,654,435 2008-2009 1,551,880 384,122 349,719 7,437,670 9,723,391

Commercial Vehicles Three Wheelers Two Wheelers Total



[edit]Automobile Type of Vehicle Passenger Vehicles

[18] [18]

2004-2005 166,402 29,940 66,795 366,407 629,544 2005-2006 175,572 40,600 76,881 513,169 806,222 2006-2007 198,452 49,537 143,896 619,644 1,011,529 2007-2008 218,401 58,994 141,225 819,713 1,238,333 2008-2009 335,739 42,673 148,074 1,004,174 1,530,660

Commercial Vehicles Three Wheelers Two Wheelers Total [edit]Product



and service segmentation

The automotive industry of India is categorised into passenger cars, two wheelers, commercial vehicles and three wheelers, with two wheelers dominating the market. More than 75% of the vehicles sold are two wheelers. Nearly 59% of these two wheelers sold weremotorcycles and about 12% were scooters. Mopeds occupy a small portion in the two wheeler market however; electric two wheelers are yet to penetrate. The passenger vehicles are further categorised into passenger cars, utility vehicles and multipurpose vehicles. All sedan, hatchback, station wagon and sports cars fall under passenger cars. Tata Nano, is the worlds cheapest passenger car, manufactured by Tata Motors - a leading automaker of India. Multi-purpose vehicles or people-carriers are similar in shape to a van and are taller than a sedan, hatchback or a station wagon, and are designed for maximum interior room. Utility vehicles are designed for specific tasks. The passenger vehicles manufacturing account for about 15% of the market in India.

Commercial vehicles are categorised into heavy, medium and light. They account for about 5% of the market. Three wheelers are categorised into passenger carriers and goods carriers. Three wheelers account for about 4% of the market in India.
Segment[18] Passenger Car

2003-04 10.22 2.15 0.87 13.25 0.36 2.01


2004-05 10.39 2.23 0.82 13.44 0.32 2.19 2.51 0.25 1.27 1.52 4.03 2.17 1.73 3.90 11.68 62.86 4.08 78.63 100.00

2005-06 9.91 2.18 0.75 12.83 0.32 2.01 2.33 0.25 1.36 1.61 3.94 2.39 1.65 4.04 10.21 65.24 3.74 79.18 100.00

2006-07 10.65 2.18 0.82 13.65 0.28 2.44 2.73 0.24 1.67 1.90 4.63 2.34 1.65 4.00 9.31 64.83 3.52 0.07 77.73 100.00

2007-08 12.42 2.39 0.98 15.79 0.43 2.10 2.53 0.32 1.77 2.10 4.63 2.51 1.51 4.01 11.57 59.35 4.47 0.19 75.57 100.00


Utility Vehicles (UVs) (%) Multi Purpose Vehicles (MPVs) (%) Total Passenger Vehicles Passenger Carriers (%) Goods Carriers (%) Total Medium & Heavy Commercial Vehicles Passenger Carriers (%) Goods Carriers (%) Total Light Commercial Vehicles (%) Total Commercial Vehicles Passenger Carriers (%) Goods Carriers (%) Total Three Wheelers
[18] [18] [18]


(%) 2.37 0.28 1.17 1.45 3.82 2.56 1.61



4.17 13.01 61.24 4.52 78.76 100.00

Scoters/Scooterettee (%) Motorcycles/Step-Throughs (%) Mopeds (%) Electric Two Wheelers (%) Total Two Wheelers Grand Total
[18] [18]





India had over 100 million vehicles registered on its roads in the year 2008.[18] This is a growth of about 100% in the past 9 years. Over 77% and about 77 million of these vehicles are two wheelers, about 14% and over 14 million are cars, jeeps and taxis. Over 5 million and over 1 million vehicles registered are goods vehicles and buses respectively.[18] Two wheelers account a significant market share. Tata Motors with the launch of Tata Nano is trying to attract some of these two wheeler buyers to buy a small, cheap and affordable passenger car.
[edit]Total Year 2001 2002

Number of Vehicle Registrations in India from 2001 to 2008

Two Wheelers (in Cars, Jeeps and Taxis '000) (in '000) 38,556 41,581 7,058 7,613 Buses (in '000) 634 635 Goods Vehicles (in Other Vehicles (in '000) '000) 2,948 2,974 5,795 6,121

All Vehicles (in '000) 54,991 58,924

2003 2004 2005 2006 2007 2008

67,007 72,718 80,045 88,068 96,808 106,591

47,519 51,922 57,417 63,487 70,141 77,588

8,599 9,451 10,460 11,571 12,810 14,222

721 768 822 879 936 1,003

3,492 3,749 4,053 4,345 4,652 5,018

6,676 6,828 7,337 7,891 8,464 9,065



See also: Bharat Stage emission standards In tune with international standards to reduce vehicular pollution, the central government unveiled the standards titled 'India 2000' in 2000 with later upgraded guidelines as 'Bharat Stage'. These standards are quite similar to the more stringent European standards and have been traditionally implemented in a phased manner, with the latest upgrade getting implemented in 13 cities and later, in the rest of the nation.Delhi(NCR), Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Sura t, Kanpur, Lucknow, Solapur, and Agra are the 13 cities where Bharat Stage IV has been imposed while the rest of the nation is still under Bharat Stage III.


The total number of new vehicles registered in the 28 states and 7 union territories of India in the year 2008 were about 106,591,000. The diagram above displays the registration of new vehicles in various states and union territories. About 16 states and 1 union territory had over a million new vehicles registered. Tamil Nadu had about 16 million new vehicles registered, Maharashtra had over 13 million, and Gujarat had over 10 million. About 91% of these vehicles are non-commercial vehicles purchased by households looking for a two wheeler, or a car. Only about 9% of new vehicles registered are used for commercial purposes. Details of category wise new vehicle registrations in the various states and union territories are displayed. The number of new vehicles registrations has grown by about 66% in the past five years.

Segmentation:State-wise motor vehicles registration in India

2002 (in '000) 4,389 21 596 1,024 2003 (in '000) 5,002 21 657 1,121 2004 (in '000) 5,720 21 727 751 2005 (in '000) 6,446 21 798 726 2006 (in '000) 7,232 21 883 694 2007 (in '000) 8,042 21 973 647 2008 (in '000) 8,989 21 1,086 593

from 2001 - 2008

States\Year Andhra Pradesh Arunachal Pradesh Assam Bihar 2001 (in '000) 3,966 21 542 949

Chhattisgarh Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttarakhand Uttar Pradesh West Bengal

857 341 5,576 1,949 217 330 909 3,537 2,112 3,095 6,760 77 62 31 160 1,096 2,910 2,943 12 5,162 50 364 4,921 1,690

948 366 6,008 2,122 244 364 984 3,636 2,315 3,173 7,414 90 67 34 177 1,215 3,103 3,197 13 5,658 57 406 5,171 1,690 28 386 13 41 3,699 5 270

1,076 397 6,508 2,279 269 399 1,101 3,738 2,552 3,459 8,134 97 73 37 162 1,359 3,308 3,487 15 8,005 66 457 5,928 2,366 28 562 31 44 3,971 5 293

1,216 436 7,087 2,548 289 439 1,217 3,977 2,792 3,804 8,969 106 73 42 172 1,525 3,529 3,834 17 8,575 76 516 6,460 2,548 28 586 35 48 4,237 5 313

1,367 483 7,892 2,883 329 493 1,341 4,338 3,180 4,119 10,055 114 78 48 186 1,717 3,859 4,285 19 10,085 85 580 7,271 2,816 31 629 43 55 4,544 6 359

1,536 537 8,785 3,267 375 556 1,479 4,717 3,612 4,442 11,281 123 84 54 201 1,936 4,225 4,791 21 11,901 95 651 8,144 3,138 34 677 54 63 4,868 7 418

1,726 585 9,633 3,689 421 628 1,630 5,036 4,034 4,710 12,477 134 89 61 215 2,159 4,571 5,281 23 13,860 105 732 8,970 3,464 38 732 67 71 5,166 7 495

1,939 638 10,543 4,164 480 719 1,796 5,360 4,564 4,968 13,817 145 95 70 230 2,417 4,992 5,815 25 16,207 117 822 9,919 3,833 42 799 86 79 5,469 8 552

Andaman & Nicobar 25 Islands Chandigarh Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry 386 13 37 3,635 4 252


Segmentation: Category-wise number of registrations in States

Hi m ac ha l Pr ad es Ja m m u & K as h M ad hy a Pr ad es h T N a P Ra Si ag O mi un jas k al ris l ja th ki an sa N b an m d ad u Ut ta r Pr ad es h

of India
A nd Type hr of a Vehic Pr le [18] ad es h Ar un ac ha l Pr ad es A Ch G H Bi G ss hat uj ar h o a tisg ar ya ar a m arh at na Jh ar kh an d Ka rn ata ka K er al a Ma har ash tra M an ip ur M eg hal ay a M iz or a m T ri p ur a Utt ara kha nd W est Be ng al

h m ir

Multia xled/ Articu lated Vehicl es/Tru cks & Lorrie s

8 3 2 14 18 14 1, 27 24 3, 0, 8, 41 29 62, 10 73 77 243 5, 14, 3, 41 50 75 17 6, 94 3, 2,3 40, 2, 7, 6 6, 9,7 1, 1 5 3 ,6 ,9 56 0,5 ,3 ,1 ,11 96 02 21 ,0 ,4 ,9 3,5 32 ,4 14 23 413 30 66 1 23 99 03 8 1 2 44 58 6 96 15 78 3 3 8 5 19 96 21 52 1 82 7 4 7 9 5 5 9 6 6

Light 1 3 Motor 66 4, 2, Vehicl 55 16, ,8 3 2 es 5 686 91 1 9 (good 7 6 s)

20 58 2, 12 4, ,3 34 ,2 33 25 0 72 6

13 91, 30 256 1, 6, 75 ,0 ,08 20 18 5 30 2 6 1

20 1, 9, 35 34 13, 3 57 4, 59 5,6 25 24 ,5 ,6 60 5 ,6 31 5 62 5 3 43 45 1 3 81 4

1 1 4, 15 0, 0, 45 9, 4, 20 29, 67 24 2, 3, 13 18 55, 4 76 1, 26 41 66 2,0 8 9,5 49, 2,8 84 4,6 Buses ,4 2 9 ,6 36 87 ,1 71 ,2 ,6 40 50 ,9 ,5 93 0 ,9 59 ,4 ,3 5 43 6 39 092 27 0 26 98 8 6 69 9 2 39 0 06 26 3 5 66 79 6 6 07 6 37 85 8 6 1 1 1 8, 11 4, 11 81 0, 4, 40 14 14 10 21, 40, 61 102 3, 4, 24 11 32, 30 67 29 22, 2 4, 36 5,0 9 6, 25 13, Taxis ,6 3 0 ,1 ,9 ,9 ,3 81 83 ,4 ,47 86 44 ,6 ,9 86 ,1 ,9 9 005 7 24 3 30 4 37 7 385 27 6 0 00 90 70 25 4 9 24 5 4 8 14 82 8 93 18 3 5 7 3 8 0 Light Motor Vehicl es (passe nger) Total Com merci al 2 26 9, 9, 27 29 9, 37 2, 14 36, 19 45 493 2, 1, 8, 21 36 64, 3, 1,4 5 7,4 3 6, 4, 2,9 8 ,8 78 ,2 25 0,3 ,1 ,14 52 14 29 ,8 ,8 58 32 30 0 74 7 90 24 34 0 41 3 55 7 62 46 2 1 5 1 93 38 0 5 7 5 8 4 6 1 9 5 57 4 74 26 68 23 14 17 7, 7, 0, 66 86 13 45 34 1,1 12 24, 10 66 0, 5,2 7, 88, 9, 8, 5, 8, 6, 7, 3 2 8 ,6 ,9 0,1 3,2 0,5 43, ,4 81 ,3 ,5 48 72 9 621 31 19 19 40 51 96 2 8 4 09 49 76 62 37 904 56 9 19 06 8 6 7 2 1 4 2 5 5 0 2 6 3 0 9, 4 8 8 5, 16 2, 16 7 1, 52 6, 40 4 15 2, 28 6 1, 2, 1, 2, 25 2,7 93 59 87 6,2 75 21, 19 36 22 58 3, 32, 7,7 5, 6, 16, ,3 05 ,5 ,7 3, 7, 61 67 45 80 19 794 33 0 01 41 57 18 1 4 8 1 3 1 2,6 92, 17 5 15 12 78 38 4, 6,7 ,1 ,0 ,2 19 99 62 67 89 2

82 28 38 20 8, 40, 6, 8, ,9 02 271 86 62 31 1 0 7

4 4 4, 1 6 Two 54 10, 991 8, 9, Wheel 3, 60 ,02 7 7 ers 28 5 2 8 5 3 0 1

6, 4, 73 44 391 6 4, ,2 ,25 8 20 41 1 2 5

4, 92 2, 04 7

1, 58 1, 32 6


1 2 7 39 0 57 27 37 14 26 1, 7, 1, 51 74 92, 41 20 924 8, 14, 4, 33 62 7, 2,3 6, 43, 2, 2, 8, 8, 7, 8 5 5 ,9 ,1 17 8,1 3,9 ,00 03 59 85 ,2 ,5 73 40 0 572 41 89 91 03 37 7 0 1 18 87 1 81 0 5 0 73 53 91 6 8 6 4 5 2 0 9 0 8 6 3 1 2 58 4, 1, 2,2 7,3 ,1 2 7 60 02 14 6 2 6 6

73 39 49 8, 1, 42, 1, 4, 67 38 220 44 50 2 0 3 5


11 2, 87 12 10 23, 41, 71 36 262 7, 6, 21 26 32 12 53 0, 9,4 8 ,2 ,3 ,6 41 02 ,6 ,2 ,74 87 76 ,6 ,5 ,7 8,0 ,9 94 01 6 03 31 93 9 4 56 82 1 2 5 49 27 97 56 87 3 3

97 6,4 ,8 52 21

36 Omni ,5 Buses 49

3, 2 5 9

1, 2, 34 76 44 5 5

36, 30 51 ,4 3 88

12, 57 609 0

2, 20 23 7 8

4 19 8 ,9 7 57

14 787 ,7 36

1 7 27 37 32 45 71 62 0, 7, 4 3, 10 15, 11 9, 201 1, 1, 30 40 90 48 Tracto 33 44, 5, 3, 8, 44 20 9, 14 31, 8, ,3 2 8 7 89 ,9 13 9,3 00 ,94 26 82 ,5 7,5 9 ,8 ,3 rs 3 321 54 37 38 1 9 01 7 981 08 63 8 4 0 8 69 6 40 4 0 3 7 92 23 86 41 3 3 0 4 2 0 8 1 5 8, 9 46 0, Trailo 15 7 38, 9, ,8 4 rs 5 4 804 6 85 0 0 0 3 3 16 12 12 56 1,9 4, 62 ,5 0,1 1 13 93 12 85 3 19 2, 24 57 0, 25 69 41 580 30 ,1 ,0 62 4 6 0 4 81 13 8 3 9, 1, 89 10, 9 01 8 021 1 5 0

2 2, 3, 4, 0, 16 17 1, 1, 55, 19 11 11 8, 4, 17 9 2,1 8 5,7 16, 22 77 24 4,5 Others 50 7 ,1 ,0 66 62 40 ,1 ,3 ,0 80 35 9 2 03 0 99 111 1 2 7 11 0 2 58 78 5 6 5 02 08 18 6 4 8 4 4 5 6 3 5, 6, 2, Total 7 5 8 22 14 15, 1,1 33 27 non8, 3, 5, 2, 9, 87 27, 8, 9, comm 8 4 2 20 43 2 124 17 71 ercial 5 2 7 4 2 3 8 3 3 8 [edit]Geographical 35 1, 64 7 1,0 86, 78 2 2, 3, 3,5 10 10 56 7,8 93 48, 31 23, 5, 6, 5, 24, ,8 56 ,8 32 41 88 12 829 69 3 26 2 1 3 4 1, 37 8, 47 0 3, 35 1, 13 5 3,4 93, 26 9

19 35 76 54 2,1 ,1 ,1 ,8 1 22 88 64 95

7, 9, 74 54 475 9 7, ,6 ,71 1 22 16 1 1 0

6, 17 3, 33 8

2, 15 9, 33 6

Segmentation: Category-wise registration in Union Territories of

Dadra & Andaman & Chandigarh Nagar Nicobar Islands Haveli 1,519 459 436 784 3,198 21,743 1,693 1,033 261 67 461 25,258 1,671 7,459 1,239 1,173 11,542 416,917 157,612 36 574,565 5,487 1,190 154 108 500 7,439 17,881 9,270 429 6 44 46 27,676

Type of Vehicle Multiaxled/Articulated Vehicles/Trucks & Lorries Light Motor Vehicles (goods) Buses Taxis Light Motor Vehicles (passenger) Total Commercial Two Wheelers Cars Jeeps Omni Buses Tractors Trailors Others Total non-commercial [edit]Exports Daman & Delhi Diu 1,896 1,829 361 43 890 5,019 30,351 12,278 295 38 165 124 30 43,281 75,601 75,947 36,059 24,712 20,893 233,212 Lakshadweep Pondicherry

270 408 678

6,588 2,923 1,831 1,421 4,283 17,046 235,438 47,642 3,838 2,545 318 1,582 4,541 295,904

2,665,750 3,978 1,192,389 78 122,283 8,386 4,851 99 9,705 85 5 44 503

4,003,463 4,693

Mahindra Scorpio Jeep in service with the Italy's CNSAS.

India's automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India's largest export market followed by Italy, Germany, Netherlands and South Africa.[30] India's automobile exports are expected to cross $12 billion by 2014.[31] According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.[32] In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011.[33] Similarly, General Motorsannounced its plans to export about 50,000 cars manufactured in India by 2011.[34] In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export.[35] The company said that the plant was a part of its plan to make India the hub for its global production business.[36] Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.[37] In July 2010, The Economic Times reported that PSA Peugeot Citron was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation.[38] PSA's intention to utilise this production facility for export purposes however remains unclear as of December 2010.

A Tata Safari on display in Poznan,Poland.

In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign carmakers 100% ownership of factories in India, which China does not allow.[5] In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars forNissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project.[39] While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.[39]
[edit]Top Rank 1 2 3 4 5 6 7

20 Export destinations in 2007-2008 and growth from previous year

Country 2007-2008 (in USD Millions) 2008-2009 (in USD Millions) 525.24 359.68 216.11 188.57 246.32 192.74 265.63 Percentage Growth -11.52 8.22 -13.26 -15.79 48.77 17.21 80.28

United States of America 593.64 Italy Sri Lanka South Africa United Kingdom United Arab Emirates Algeria 332.35 249.14 224.93 165.57 164.44 147.34

8 9 10 11 12 13 14 15 16 17 18 19 20

Bangladesh Egypt Germany Colombia Nepal Mexico Turkey Spain France Nigeria Greece Netherland Ghana

137.26 134.43 133.52 118.88 111.33 93.80 83.53 81.01 76.77 66.01 65.75 65.19 59.91

164.86 143.54 409.63 120.71 98.13 94.10 73.82 56.96 134.21 148.74 127.63 163.66 38.30

20.11 5.99 206.8 1.54 -11.86 0.32 -11.63 -29.69 74.83 125.03 94.1 151.05 -36.07


vehicles in India

See also: List of cars available in India and List of auto plants in India This list is of cars that are officially available and serviced in India. While other cars can be imported to the country at a steep 110% import duty, car-makers such as Alfa Romeo,[40] McLaren,[41] Pagani,[42] Cadillac,[43] Chrysler,[44] SSC,[45] Zenvo,[46] MINI,[47] Smart,[48]D aihatsu,[49] Lexus,[50] Infiniti,[51] Acura,[52] Saab,[53] Spyker,[54] Lotus,[55] PeugeotCitron,[56] Mazda,[57] Jeep,[58] SsangYong,[59] Kia,[60]GAZ[61] and Proton[62] are in varying stages of official introduction to the Indian automobile market.

automotive companies

Chinkara Motors[63]: Beachster, Hammer, Roadster 1.8S, Rockster, Jeepster, Sailster


Hindustan Motors[64]: Ambassador ICML[65]: Rhino Rx Mahindra[66]: Major, Xylo, Scorpio, Bolero, Thar, Verito, Genio Premier Automobiles Limited[67]: Sigma, RiO San Motors[68]: Storm


Tata Motors[69]: Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo CS, Sumo, Venture, Safari, Xenon, Aria

automotive companies in India

[edit]Vehicles manufactured or assembled in India

Manufactured only in Chennai, India, thei10 is one of Hyundai's best selling globally exported cars.

Maruti Swift. Maruti Suzuki, a subsidiary of Japan's Suzuki Motor, is the largest automobile manufacturer in India.



BMW India[71]: 3 Series, 5 Series, X1. Fiat India[72] (in collaboration with Tata Motors): Grande Punto, Linea. Ford India[73]: Figo, Ikon, Fiesta, Endeavour. General Motors India[74]

Chevrolet[75]: Spark, Beat, Aveo UVA, Aveo, Optra, Cruze, Tavera.


Honda Siel[76]: Jazz, City, Civic, Accord. Hyundai Motor India[77]: Santro, i10, i20, Accent, Verna Transform, Sonata Transform.


Land Rover[78]: Freelander 2 Maruti Suzuki[79]: 800, Alto, WagonR, Estilo, Astar, Ritz, Swift, Swift DZire, SX4, Omni,Versa, Eeco, Gypsy.


Mercedes-Benz India: C-Class, E-Class. Mitsubishi[80] (in collaboration with Hindustan Motors):[81] Lancer, Lancer Cedia, Pajero


Nissan Motor India[82]: Micra. Renault India[83][84]: Fluence Toyota Kirloskar[85]: Etios, Corolla, Innova. Volkswagen Group Sales India: Audi India: A4, A6, Q5. koda Auto India[86][87]: Fabia, Laura, Superb, Yeti. Volkswagen India[88][89]: Polo, Vento, Jetta, Passat.
Opel was present in India until 2006. As of 2011, Opel only provides spare parts and vehicle servicing to existing Opel vehicle owners.

[edit]Vehicles brought into India as CBUs

Aston Martin[90]: Vantage, Rapide, Virage, DB9, DBS, One-77. Audi[91]: A7, A8, S4, S6, S8, Q7, TT, R8, RS5. Bentley[92][93]: Arnage, Azure, Brooklands, Conti nental GT, Continental Flying Spur, Mulsanne. BMW[94]: 5 Series GT, 6 Series, 7 Series, X3, X5, X6, X6 M, M3, M5, M6 and Z4. Bugatti[95][96]: Veyron. Chevrolet: Captiva.



Ferrari[97][98]: California, 458 Italia, 599 GTB Fiorano, FF. Fiat[72]: 500, Bravo. General Motors[74]: Hummer H2, Hummer H3. Honda[99][100]: Civic Hybrid, CR-V. Hyundai[77]: Santa Fe. Jaguar[101]: XF, XJ, XK. Koenigsegg[102][103]: CCX, CCXR, Agera. Lamborghini[104]: Gallardo, Murcilago. Land Rover[105]: Discovery 4, Range Rover, Range Rover Sport. Maserati[106]: Quattroporte, GranTurismo, Gran Cabrio. Maybach[107]: 57 and 62. Mercedes-Benz[108]: CL-Class, GL-Class, MClass, R-Class, CLS-Class, S-Class, SLClass, SLK-Class, Viano, G-Class, SLS. Mitsubishi: Montero, Outlander, Evo X. Nissan[109]: Teana, X-Trail, 370Z, GT-R. Porsche[110][111]: 997, Boxster, Panamera, Cay man, Cayenne, Carrera GT. Rolls Royce[112]: Ghost, Phantom, Phantom Coup, Phantom Drophead Coup. koda[86]: Yeti, Superb. Suzuki: Grand Vitara, Kizashi. Toyota[85]: Prius, Camry, Fortuner*, Land Cruiser, Land Cruiser Prado. Volkswagen[113]: Beetle, Tiguan, Touareg, Pha eton. Volvo[114]: S60, S80, XC60, XC90.





*Toyota Fortuner is imported as a CKD kit from Toyota Motor Thailand.


vehicle manufacturers in





Force[115] Hindustan Motors[116] Premier[67] Tata[117] AMW[118] Eicher Motors[119]


Venture Brands

VE Commercial Vehicles Limited[120] - VE Commercial Vehicles limited - A JV between Volvo Groups & Eicher Motors Limited. Ashok Leyland[121] - originally a JV between Ashok Motors and Leyland Motors, now 51% owned by Hinduja Group Mahindra Navistar[122] - a 51:49 JV between Mahindra Group and Navistar International Swaraj Mazda[123] - originally a JV between Punjab Tractors and Mazda, now 53.5% owned by Sumitomo Group Kamaz Vectra[124] - A JV between Russia's KaMAZ and the Vectra Group




Volvo[125] Tatra[126] MAN[127] - as a JV with Force Motors, makes MAN Trucks in India Mercedes-Benz[128] sells luxury buses in India Daimler AG[129] - manufactures BharatBenz, a brand of trucks based on the Fuso and the Mercedes Benz truck platforms, which Daimler AG owns



Scania[130] Iveco[131] Hino[132] Isuzu[133] Piaggio[134] Caterpillar Inc.[135]


car manufacturers in India


Ajanta Group[136] Mahindra[137] Hero Electric[138] REVA Tara International[139] Tata[140]



Market Size The Indian Automotive Industry after de-licensing in July 1991 has grown at a spectacular rate on an average of 17% for last few years. The industry has attained a turnover of USD 35.8 billion, (INR 165,000 crores) and an investment of USD 10.9 billion.[18] The industry has provided direct and indirect employment to 13.1 million people. Automobile industry is currently contributing about 5% of the total GDP of India. Indias current GDP is about USD 650 billion and is expected to grow to USD 1,390 billion by 2016.[18] The projected size in 2016 of the Indian automotive industry varies between USD 122 billion and UDS 159 billion including USD 35 billion in exports. This translates into a contribution of 10% to 11% towards Indias GDP by 2016, which is more than double the current contribution.[18] Demand Determinants

Determinants of demand for this industry include vehicle prices (which are determined largely by wage, material and equipment costs) and exchange rates, preferences, the running cost of a vehicle (mainly determined by the price of petrol), income, interest rates, scrapping rates, and product innovation. Exchange Rate:Movement in the value of Rupee determines the attractiveness of Indian products overseas and the price of import for domestic consumption. Affordability: Movement in income and interest rates determine the affordability of new motor vehicles. Allowing unrestricted Foreign Direct Investment (FDI) led to increase in competition in the domestic market hence, making better vehicles available at affordable prices. Product Innovation is an important determinant as it allows better models to be available each year and also encourages manufacturing of environmental friendly cars. Demographics: It is evident that high population of India has been one of the major reasons for large size of automobile industry in India. Factors that may be augment demand include rising population and an increasing proportion of young persons in the population that will be more inclined to use and replace cars. Also, increase in people with lesser dependency on traditional single family income structure is likely to add value to vehicle demand. Infrastructure: Longer-term determinants of demand include development in Indians infrastructure. Indias banking giant State Bank of India and Australias Macquarie Group has

launched an infrastructure fund to rise up to USD 3 billion for infrastructure improvements. India needs about $500 billion to repair its infrastructure such as ports, roads, and power units. These investments are been made with an aim to generate long-term cash flow from automobile, power, and telecom industries. (Source: Silicon India) Price of Petrol:Movement in oil prices also have an impact on demand for large cars in India. During periods of high fuel cost as experienced in 2007 and first half of 2008, demand for large cars declined in favour of smaller, more fuel efficient vehicles. The changing patterns in customer preferences for smaller more fuel efficient vehicles led to the launch of Tata Motors Nano one of worlds smallest and cheapest cars.


International Markets Exports The level of trade export is medium The level of trade export is increasing International Markets Imports The level of trade import is low The level of trade import is increasing

Markets Analysis

The Indian automotive industry embarked a new journey in 1991 with de-licensing of the sector and subsequent opening up for 100% foreign direct investment (FDI). Since then almost all global majors have set up their facilities in Indian taking the level of production from 2 million in 1991 to over 10 million in recent years.[18] The exports in automotive sector have grown on an average

compound annual growth rate of 30% per year for the last seven years. The export earnings from this sector are over USD 6 billion.[18] Even with this rapid growth, the Indian automotive industrys contribution in global terms is very low. This is evident from the fact that even thought passenger and commercial vehicles have crossed the production figures of 2.3 million in the year 2008,[18] yet Indias share is about 3.28% of world production of 70.53 million passenger and commercial vehicles. Indias automotive exports constitute only about 0.3% of global automotive trade.[18]

of Competition

Competition in this industry is high. Competition in this industry is increasing. Automotive industry is a volume-driven industry, and certain critical mass is a pre-requisite for attracting the much-needed investment in research and development and new product design and development. Research and development investment is needed for innovations which is the lifeline for achieving and retaining competitiveness in the industry. This competitiveness in turn depends on the capacity and the speed of the industry to innovate and upgrade. The most important indices of competitiveness are productivity of both labour and capital. The concept of attaining competitiveness on the basis of low cost and abundant labour, favourable exchange rates, low interest rates and concessional duty structure is becoming inadequate and therefore, not sustainable. A greater emphasis is required on the development of

the factors like innovation which can ensure competitiveness on a long-term basis. India, with a rapidly growing middle class (450 million in 2007 as per NCAER Report), market oriented stable economy, availability of trained manpower at competitive cost, fairly well developed credit and financing facilities and local availability of almost all the raw materials at a competitive cost, has emerged as one of the favourite investment destinations for the automotive manufacturers. These advantages need to be leveraged in a manner to attain the twin objective of ensuring availability of best quality product at lower cost to the consumers on the one hand and developing and assimilating the latest technology in the industry on the other hand. As per Automotive Mission Plan 20062016 (2008), the Indian Government recognises its role as a catalyst and facilitator to encourage the companies to move to higher level of competitive performance. The Indian Government wants to create a policy environment to help companies gain competitive advantage. The government aims that with its policies its encourage growth, promote domestic competition and stimulate innovation.


The life cycle stage is growth Life Cycle Reasons The market for manufacturing motor vehicles is consistently increasing. The products manufactured by this industry are profitable. Companies have been consistently opening new plats and employing over the past five years. Japanese and European manufacturers of motor vehicles have entered the

market. Industry value added has been rising, along with the rise in GDP. Life Cycle Analysis General improvement in availability of trained manpower and good infrastructure is required for sustainable growth of the industry. Keeping this in view, the Indian Government has launched a unique initiative of National Automotive Testing and R&D Infrastructure Project (NATRIP) to provide specialised facilities for Testing, Certification and Homologation to the industry. A similar initiative is required for creating specialised institutions in automotive sector for education, training and development. The auto industry has grown in the clusters of interconnected companies which are linked by commonalities and complementarities. The major clusters are in and around Manesar in North, Pune in West, Chennai in South, Jamshedpur-Kolkata in East and Indore in Central India. The Government is planning to create a National Level Specialises Education and Training Institute for Automotive Sector and to enhance the transportation, communication and export infrastructure facilities. The contribution of automotive sector in the GDP of India is expected to double by 2016[18] through major spotlight on export of small cars, Multi-Utility Vehicles, Two and Three wheelers.


Barriers to Entry Barriers to entry in this industry is high These barriers are study The cost of developing high volume production facilities. The ability to gain access to technology of major global operators. The relatively high competition between established domestic companies and foreign

companies. The automobile manufacturing sector is characterised by a high cyclical growth patterns, high fixed cost and break-even point levels, and an excessive number of participants. Barriers to entry into automobile manufacturing activity are formidable. Some of the barriers that need to be overcome by a new entrant include: the cost of developing high volume production facilities, in order to benefit from economies of scale; and the ability to gain access to technology of major operators, as the present incumbents include some of the largest multinationals, that have considerable claims to new technology. The relative large size of domestic market, together with high competition, has already seen significant rationalisation of this industry.

India has a well developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government, in accordance with the provisions of the Indian Constitution. The main taxes/duties that the Union Government is empowered to levy are:- Income Tax (except tax on agricultural income, which the State Governments can levy), Customs duties, Central Excise and Sales Tax and Service Tax. The principal taxes levied by the State Governments are:- Sales Tax (tax on intra-State sale of goods), Stamp Duty (duty on transfer of property), State Excise (duty on manufacture of alcohol), Land Revenue (levy on land used for agricultural/non-agricultural purposes), Duty on Entertainment and Tax on Professions & Callings. The Local Bodies are empowered to levy tax on properties (buildings, etc.), Octroi (tax on entry of goods for

use/consumption within areas of the Local Bodies), Tax on Markets and Tax/User Charges for utilities. Excise Duty Central Excise duty is an indirect tax levied on those automobiles which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the automobiles are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers. Types of Excise Duties Basic Excise Duty: This is the duty leviable under First Schedule to the Central Excise Tariff Act, 1985 at the rates mentioned in the said Schedule. Special Excise Duty: This is the duty leviable under Second Schedule to the Central Excise Tariff Act, 1985 at the rates mentioned in the said Schedule. At present this is leviable on very few items. National Calamity Contingent Duty (NCCD): Normally known as NCCD. This duty is levied as per section 136 of the Finance Act, 2001, as a surcharge on specified goods. Excise Duties and Cesses Leviable under Miscellaneous Act:On certain specified goods, in addition to the aforesaid duties, prescribed rate of excise duty and cess is also leviable. Education Cesson excisable goods is levied in addition to any other duties of excise chargeable on such goods, under the Central Excise Act, 1944 or any other law for the time being in force.


Taxation of inputs, like raw materials, components and other intermediaries has a number of limitations. In production process, raw material passes through various processes stages till a final product emerges. Thus, output of the first manufacturer becomes input for second manufacturer and so on. When the inputs are used in the manufacture of product `A', the cost of the final product increases not only on account of the cost of the inputs, but also on account of the duty paid on such inputs. As the duty on the final product is on ad valorem basis and the final cost of product `A' includes the cost of inputs, inclusive of the duty paid, duty charged on product `A' meant doubly taxing raw materials. In other words, the tax burden goes on increasing as raw material and final product passes from one stage to other because, each subsequent purchaser has to pay tax again and again on the material which has already suffered tax. This is called cascading effect or double taxation. This very often distorted the production structure and did not allow the correct assessment of the tax incidence. Therefore, the Government tried to remove these defects of the Central Excise System by progressively relieving inputs from excise and countervailing duties. An ideal system to realize this objective would have been to adopt value added taxation (VAT). However, on account of some practical difficulties it was not possible to fully adopt the value added taxation. Hence, Government evolved a new scheme, `MODVAT' (Modified Value Added Tax). MODVAT Scheme which essentially follows VAT Scheme of taxation. i.e. if a manufacturer A purchases certain

components(raw materials) from another manufacturer B for use in its product. B would have paid excise duty on components manufactured by it and would have recovered that excise duty in its sales price from A. Now, A has to pay excise duty on product manufactured by it as well as bear the excise duty paid by the supplier of raw material B. Under the MODVAT scheme, an Original Equipment Manufacturer can take credit of excise duty paid by First Tier and Second Tier suppliers. It amounts to excise duty only on additions in value by each manufacturer at each stage. MODVAT Scheme ensures the revenue of the same order and at same time the price of the final product could be lower. Apart from reducing the costs through elimination of cascade effect, and bringing in greater rationalization in tax structure and also bringing in certainty in the amount of tax leviable on the final product, this scheme will help the consumer to understand precisely the impact of taxation on the cost of any product. Subsequently, MODVAT scheme was restructured into CENVAT (Central Value Added Tax) scheme. A new set of rules 57AA to 57AK , under The CENVAT Credit Rules, 2004, were framed and whatever restrictions were there in MODVAT Scheme were put to an end and comparatively, a free hand was given to the assesses. Under the CENVAT Scheme, a manufacturer of final product or provider of taxable service shall be allowed to take credit of duty of excise as well as of service tax paid on any input received in the factory or any input service received by manufacturer of final product. Inputs include goods used in the

manufacture of capital goods which are further used in the factory of the manufacturer.


Customs Duty (Import duty and Export tax) is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. In India, the basic law for levy and collection of customs duty is Customs Act 1962. It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc. Export duties are levied occasionally to mop up excess profitability in international prices of goods in respect of which domestic prices may be low at the given time. But the sweep of import duties is quite wide.


Service tax is a tax levied on services rendered by a person and the responsibility of payment of the tax is cast on the service provider. It is an indirect tax as it can be recovered from the service receiver by the service provider in course of his business transactions. Service Tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994. It was imposed on an initial set of three services in 1994 and the scope of the service tax has since been expanded continuously by subsequent Finance Acts. The Finance Act extends the levy of service tax to the whole of India, except the State of Jammu & Kashmir.[18] (Source: National Information Centre)

Industry Assistance The automobile industry has a defined its target in the Automotive Mission Plan as To emerge as the destination of choice in the world for design and manufacture of automobiles with output reaching a level of USD 145 billion accounting more than 10% of GDP and providing additional employment to 25 million people by 2016.[18] In order to achieve this plan interventions are required from both Industry and Indian Government. The Indian Government would play a key enabling role in facilitating infrastructure creation, promote the countrys capabilities, create a favourable and predictable business environment, attract investment and promote research & development. The role of Industry will primarily be in designing and manufacturing products of world-class quality standards, establishing cost competitiveness, improving productivity of both labour and capital, achieving scale and R&D enhancing capability and showcasing Indias products in potential markets. In order to achieve these goals the following key recommendations have been made in the Automotive Mission Plan to the Indian Government and Industry: Manufacturing and export of small cars, multi-utility vehicles, two and three wheelers, tractors, components to be promoted Care to be taken of negative like and rules of the country with current negotiation of Free Trade Agreement and Regional Trade agreement with countries like Thailand, Singapore, Malaysia, China, Korea, Egypt, Gulf etc. Attractive Tariff Policy which may follow attractive investment. Specific measures will be taken for expansion of domestic market. Incremental

investment of USD 35 to 40 billion to Automotive Industry during the next 10 years. National Road Safety Board to act as the coordinating body for promoting safety. Inspection and Certification system to be strengthened by encouraging publicprivate partnership. National level Automotive Institute for training on automobile at International Training Institutes (ITIs) and Automotive Training Institute (ATIs) to be set up.
An Auto Design Centre to be established at National Institute of Design, Ahmadabad.

National Automotive Testing and R&D Implementation Project (NATRIP) to act as Centre of Excellence for Technical Design Data. Integration of Information Technology in manufacturing to be promoted. R&D for product, process and technology to be incentivised. Road Map for Auto Fuel Policy beyond 2010 would be drawn. The profitability of motor vehicle manufacturers has been rising over the past five years, mainly due to rising demand and growth of Indian middle class. Major players of the industry, like Maruti Suzuki India and Tata Motors have been recording profits of 6% to 11% from the past five years. Whereas, earlier profit margins in the industry were only 1.5% to 3%. Cost of material has reduced from over 85% in the year 2001-2002 to under 80% in the year20082009.[18] Wages and salary as a percentage of revenue has been declining and with the increasing labour productivity this is expected to decline further in the coming years.


and Labour Intensity

The level of Capital Intensity is high The level of Labour intensity in medium The motor vehicle manufacturing industry requires significant level of capital investment. Value is added through the automated manufacturing and assembly of costly components. Labour input is required in the manufacturing, assembly, and finishing processes. In order to achieve and retain competitiveness, vehicle manufacturing industry depends on its capacity and speed to innovate and upgrade. The most imperative indices for competitiveness in the industry are productivity in both labour and capital. Technology and Systems The level of technology change is high The rate of change in technology is medium Investment in technology by producers has been on the rise. The automobile industry in India has seen an enormous development in the engines which are being used. Carburettor engines have become obsolete and Multi Point Fuel Injection (MPFI) engines are the order of the days in patrol cars. The Diesel engines have also under gone a sea change from the time Rudolf Diesel invented it way back in the 1892. Today Common Rail Direct Injection (CRDI) is the order of the day. Multi Point Fuel injection (MPFI) The fuel injects were used to meet stricter emission norms as it keeps pollutants to bare minimum and drives the maximum performance out of a vehicle by squeezing out the maximum mileage even from the last drop of fuel that goes into the engine.

MPFI system injects fuel into individual cylinders after receiving command from the on board engine management system computer or Engine Control Unit (ECU). This technology results in superior fuel combustion, better fuel management, engine performance and reduced pollution. To get the maximum out from these types of engine one should use Premium petrol like XTRA Premium, Speed, and Power. Common Rail Direct Injection (CRDI) CRDI engine cars offer 25% more power than the normal direct injection engine with a superior pickup and torque, offering sometimes up to 70% more power than the conventional diesel engines. They are smooth, less strident, and immensely fuel efficient giving around 24 kilometres to a litre of Diesel. The fact that Diesel is cheaper than petrol in India further attributes greatness to the engine. In a CRDI engine, a tube or a common rail connects all the injectors and contains fuel at a constant pressure. The high pressure in the common rail ensures that when injected, the fuel breaks up into small particles and mixes evenly with the air, thereby leaving little un-burnt fuel thus reducing pollution. The common rail principle has been used to reduce the noise which used to be a downside with earlier Diesel engines; the technology has been pioneered by the Fiat group, only to be adopted by other automobile companies around the world. However, these engines are 25% more costly than the conventional engines. They also require higher degree of maintenance and spares are also expensive.

The Indian automotive industry is in the mindset of a major structural transformation in todays globalised scenario. System Supplies of integrated components and sub-systems has become the order of the day, with individual small components being supplied to the system integrators instead of vehicle manufacturers. In this process most of the Small Scale Industrial units, manufacturing smaller individual components, have become tier 2 and tier 3 suppliers, while the large companies including most Multi National Companies are being transformed into tier 1 companies who purchase from tier 2 and tier 3, and sell to the auto manufacturers. (Source: Department of Heavy Industry) Investment in new technology such as supply-chain management and collaborative forecasting (where members of the supply chain share forecasting data to reduce bottlenecks) will help make industry more competitive.


The level of volatility is medium. Over the past few years, the Motor Vehicle Manufacturing industry has become more volatile. This has been the result of fluctuations in metal prices and fuel prices, as well as changes in legislation and assistance packages. Indias increasing per capita disposable income and growth in exports is playing a major role in the rise and the competitiveness of the industry. As per the BRIC report Indias per capita disposable income from current year will rise by 106% in 2015. This increase in the spending power has been a forefront of the economic development. According

to the Economic Times of India, economic liberalization allowing unrestricted Foreign Direct Investment (FDI) and removing foreign currency neutralisation and export obligations has been also been one of the key to Indias automotive volatility.
[edit]Key [edit]Tata


Market Share: Commercial Vehicles 63.94%, Passenger Vehicles 16.45%[18] Tata Motors Limited is Indias largest automobile company, with consolidated revenues of USD 14 billion in 2008-09. It is the leader in commercial vehicles and among the top three in passenger vehicles. Tata Motors has winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer with over 24,000 employees. Since first rolled out in 1954, Tata Motors as has produced and sold over 4 million vehicles in India. Tata Motors is the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the United Kingdom, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two British brands which was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea's second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new

products in the Korean market, while also exporting these products to several international markets. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence is being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader in bodybuilding for buses and coaches to manufacture fully-built buses and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company's pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata Motors is also expanding its international footprint by franchises and joint ventures assembly operations in Kenya, Bangladesh, Ukraine, Russia, Senegal and South Africa. With over 3,000 engineers and scientists, the company's Engineering Research Centre, established in 1966, has enabled pioneering technologies and products. The company today has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first fully indigenous

passenger car. Within two years of launch, Tata Indica became India's largest selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata Ace, India's first indigenously developed mini-truck. In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, a development which signifies a first for the global automobile industry. Nano brings the comfort and safety of a car within the reach of thousands of families. The standard version has been priced at USD 2,200 or Rs.100,000 (excluding VAT and transportation cost). The Tata Nano has been subsequently launched as planned, in India in March 2009.[18]

Suzuki India

Market Share: Passenger Vehicles 46.07% Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 45% of the domestic car market. The company offers a complete range of cars from entry level Maruti-800 and Alto, to stylish hatchback Ritz, A star, Swift, Wagon-R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara. Since inception in 1983, Maruti Suzuki India has produced and sold over 10 million vehicles in India and exported over 500,000 units to Europe and other countries. The companys revenue for the fiscal 2010-2011 stood over Rs 375,224 million and Profits After Tax at over Rs. 22,886 million.[141]

Motor India

Market Share: Passenger Vehicles 14.15%

Hyundai Motor India Limited is a wholly owned subsidiary of worlds fifth largest automobile company, Hyundai Motor Company, South Korea, and is the largest passenger car exporter. Hyundai Motor presently markets 49 variants of passenger cars across segments. These includes the Santro in the B segment, the i10, the premium hatchback i20 in the B+ segment, the Accent and the Verna in the C segment, the Sonata Transform in the E segment. Hyundai Motor, continuing its tradition of being the fastest growing passenger car manufacturer, registered total sales of 559,880 vehicles in the year 2009, an increase of 14.4% over 2008. In the domestic market it clocked a growth of 18.1% as compared to 2008 with 289,863 units, while overseas sales grew by 10.7%, with export of 270,017 units. Hyundai Motor currently exports cars to more than 110 countries across European Union, Africa, Middle East, Latin America and Asia. It has been the number one exporter of passenger car of the country for the sixth year in a row. In a little over a decade since Hyundai has been present in India, it has become the leading exporter of passenger cars with a market share of 66% of the total exports of passenger cars from India, making it a significant contributor to the Indian automobile industry. In 2009, in spite of a global slowdown, Hyundai Motor Indias exports grew by 10.7%.[18] In 2010 Hyundai plans to add 10 new markets with Australia being the latest entrant to the list. The first shipment to Australia is of 500 units of the i20 and the total i20 exports to Australia are expected to be in the region of 15,000 per annum.


& Mahindra

Market Share: Commercial Vehicles 10.01%, Passenger Vehicles 6.50%, Three Wheelers 1.31% Mahindra & Mahindra is mainly engaged in the Multi Utility Vehicle and Three Wheeler segments directly. The company competes in the Light Commercial Vehicle segment through its joint venture subsidiary Mahindra Navistar Automotives Limited and in the passenger car segment through another joint venture subsidiary Mahindra Renault. In the year 2009, on the domestic sales front, the Company along with its subsidiaries sold a total of 220,213 vehicles (including 44,533 three wheelers, 8,603 Light Commercial Vehicles through Mahindra Navistar Automotives and 13,423 cars through Mahindra Renault), recording a growth of 0.6% over the previous year.[18] The companys domestic Multi Utility Vehicle sales volumes increased by 3.3%, as against a decline of 7.4% for industry Multi Utility Vehicle sales. A record number of 153,653 Multi Utility Vehicles were sold in the domestic market in 2009 compared to 148,761 MUVs in the previous year.Hence, Mahindra & Mahindra further strengthened its domination of the domestic Multi Utility Vehicle subsegment during the year, increasing its market share to 57.2% over the previous years market share of 51.3%.[18] Mahindra & Mahindra is expanding its footprint in the overseas market. In 2009 the Xylo was launched in South Africa. The company formed a new joint venture Mahindra Automotive Australia Pty. Limited, to focus on the Australian Market.


Market Share: Commercial Vehicles 22%[18] Against the backdrop of the sharp slump in demand for commercial vehicles, during 2008-09, Ashok Leyland registered sales of 47,118 medium and heavy commercial vehicles (M&HCV), 37.5% less than in the previous year. This includes 16,049 M&HCV buses and 31,069 M&HCV trucks respectively, 8.7% and 46.3% less than in the previous year. The company lost 1.8% market share in the Indian medium and heavy commercial vehicle market during the financial year 2008-09,[18]mainly due to loss of sales in the truck segment. This was because the Eastern Region, where the Companys presence had been historically weak, was relatively stable, whilst the market declined sharply in other regions. While total industry volume of the medium and heavy duty buses declined by about 8.7%, the Companys market share grew marginally and Ashok Leyland retained its number one position in this segment. The Company sold 6,812 vehicles in the overseas markets during 2008-09. This represents a decrease of approximately 6.5% over the previous year. Total industry volume related to overseas markets to which the Company exports (such as Sri Lanka, the Middle East) witnessed a reduction of about 25% over the previous year.[18] To combat the impact of decline in CV sales, the Company focused on non-cyclical businesses in the portfolio. The Company produced in all 54,049 vehicles during the year. To contain costs and conserve

cash, the Company worked only about 50% of the working days in all its manufacturing units during the second half of the year.

Honda Motors

Market Share: Two Wheelers 41.35%[18] Hero Honda has been the largest two wheeler company in the world for eight consecutive years. The company crossed the 15 million unit milestone over a 25 year span. Hero Honda sold more two wheelers than the second, third and fourth placed two-wheeler companies put together. As one of the world's technology leaders in the automotive sector, Honda has been able to consistently provide technical know-how, design specifications and R&D innovations. This has led to the development of world class, value - for- money motorcycles and scooters for the Indian market. On its part, the Hero Group has took the responsibility of creating world-class manufacturing facilities with robust processes, building the supply chain, setting up an extensive distribution networks and providing insights into the mind of the Indian customer. Since both partners continue to focus on their respective strengths, they have been able to complement each other. In the process, Hero Honda is recognized today as one of the most successful joint ventures in the world. It is therefore no surprise that there are more Hero Honda bikes on this country's roads than the total population of some European countries. Hero Honda's bikes are sold and serviced through a network of over 3500 customer touch points, comprising a mix of dealers, service centres and stockists located across rural and urban India. Hero

Honda has built two world-class manufacturing facilities at Dharuhera and Gurgaon in Haryana, and Hero Honda was the torchbearer for the twowheeler industry during 2008-2009. It sold more two-wheelers during the year than the combined volumes of the second, third and fourth placed competitor. Overall, the company sold 3.72 million two-wheelers,[18] growth of 12% over previous year. Motorcycle sales in the domestic market, which account for more than 95 per cent of Hero Honda's sales, were up by 11%. The company posted sales of USD 2.4 billion and profits after tax of USD 256.40 million during the year 2008-2009. During the year under review, your Company exported 81,194 two-wheelers, a decline of 10%. Its third and most sophisticated manufacturing plant at Haridwar has just completed a full year of operations. During the year, the company also turned in a rollicking performance with its scooter portfolio, with a 49% growth in domestic sales to 156,210 units.[18] This performance allowed Hero Honda to increase its share in the domestic scooter market by more than three percentage points. Hero Honda's performance in the two-wheeler industry was the only standout performance during the year amongst the large players. Without Hero Honda's numbers, the two wheeler industry growth would have been marginal.


Market Share: Two Wheelers 26.70%, Three Wheelers 58.60%[18]

Bajaj Auto is ranked as the world's fourth largest two and three wheeler manufacturer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Despite falling demand in the motorcycle segment, the company has succeeded in maintaining an operating EBITDA (earnings before interest, taxes, depreciation and amortisation) margin of 13.6% of net sales and other operating income. From 1.66 million motorcycles in 2007-2008, the companys domestic sales fell by 23% to 1.28 million units in 20082009.[18] Bajaj Auto is the countrys largest exporter of twoand three-wheelers.During 2008-2009, Bajaj Autos international sales achieved an all-time high of 772,519 units of two and three wheelers, representing a growth of 25% over the previous year.The growth was driven by the export of twowheelers, which increased by 31% over 2007-2008 to achieve sales of 633,463 units in 2008-2009. The company expanded its footprint in Africa and Middle East, where the regions share rose from 30% of the export business in 2007-2008 to 43% in 2008-2009. The total value of exports was USD 528 million, representing a growth of 29%.[18] The companys domestic sales of three wheelers in 2008-209 were 12% lower compared to the previous year, and stood at 135,473 units. Exports of three wheelers grew at 2% to 139,056 units


Key Sensitivity Consumer Sentiment Index

Description: Customer Sentiment Index, 12 month rolling average of the Index; historical and forecast data and analysis. End customers are very important to ensure the survival of the Motor Vehicle Manufacturing industry. Economic downturns and other events can affect the expenditure decision of households. When customers are not happy or optimistic about the future of the economy, they will tend to postpone expenditure until times are better. In 2008-09, customer sentiment is expected to fall, which will have a brunt on the augmentation in demand of cars. Domestic Goods Price Metal Iron and Steel Description: The price of input such as steel. Steel is a major input used when manufacturing a motor vehicle. Rises in the price of steel puts cost pressures on manufacturers, which often leads to a fall in profitability. Over the past five years, the price of steel has been rising rapidly. These rises in price eventually pass from the manufacturers to the end customers. Import and Export Taxes (Duties) Motor Vehicle Tariffs Description: Tariff rates applicable to the industry High taffies may restrict flow of trade but may attract investment if domestic market is big enough and growing. Over the last few years Indias tariff policies and conditions of import of vehicles have served the purpose of attracting investments. Industry is keen that the existing tariff structure roadmap and conditions of import of vehicles are retained without any modifications because of

certain systematic deficiencies which make manufacturing less cost competitive in India as compared to some of the neighbouring countries like China, Thailand, Indonesia, etc. Wold Price - Energy Crude Oil Description: The world price of crude oil, $US/barrel, and price analysis. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. Over the past five years, the price of petrol has been influenced the buying decision of motorists, who are switching more to fuel efficient options. These include cars that run on liquefied petroleum gas (LPG), diesel and small cars that achieve better mileage. The trucking sector has also been struggling with the rise in the price of fuel, which has put enormous pressures on their costs.

Success Factors

The Key Success factors in the Motor Vehicle Manufacturing industry are: Efficiency factor - Improve labour productivity, labour flexibility, and capital efficiency Resource Availability - Quality manpower availability, infrastructure improvements, and raw material availability Effective cost controls - Close relationship with supplies and goods distribution channels. Establishment of export markets Growth of export markets Having an extensive distribution/collection network - Goods distribution channels Successful industrial relations policy Ethical and tactical industrial relations Access to the latest available and most efficient technology and techniques - The degree of investment in

technological improvements and product development Optimum capacity utilisation - The level of plant utilisation Management of high quality assets portfolio - Understanding implications from Government policies