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AUTOMOBILE INDUSTRY OVERVIEW
• An annual contribution of 4% to the GDP and accounting for
about 5% of the total industrial output, this segment clearly stands out as a significant contributor to the economic growth. The industry has grown at a CAGR of 16% p.a over the last 5 years.
• With the potential to emerge as one of the largest in the
world. Presently, India is
• 2nd largest two wheeler market in the world • 4th largest commercial vehicle market in the world • 11th largest passenger car in the world and is expected to th
be the 7 largest market by 2016
• The industry has emerged as a key contributor to the Indian
OVER 9.9 MILLION VEHICLES ARE BEING PRODUCED BY INDIA - 1.3 million passenger cars and about 400 000 commercial vehicles
Passenger Vehicles Tractors2 – wheelers – wheelers 3
(400 000 veh.)
(1 308 913 )
(296 000 7600801 veh.) 424) (434
LCV’s M&HCV’s & Buses (171 781 (219 297 veh.) .)
7 manufactur ers Tata Ashok Leylan d Mahind ra Eicher Force Swaraj
7 manufacture rs Tata Ashok Leyland Eicher Swaraj Mazda Volvo Tatra
13 manufacturer s Suzuki Tata Hyundai Mahindr a Toyota Honda GM Ford HM/ Mitsubis hi Skoda Force Fiat Mercede s
8 manufacturer 8 manufactur s ers Escorts Hero Hond M&M a L&T Bajaj Punjab TVS Tractors Yama ha New LML Holland Hond ITL – a Renault Kineti Johnc Deere Royal Enfiel Steyr
6 manufactur ers Bajaj Piaggi o Mahin dra Force Atul Auto Scoot ers India
Policies relating to the Auto • In 2002, the Indian government formulated an auto sector: Auto Policy policy that aimed at promoting integrated, phased,
enduring and self-sustained growth of the Indian automotive industry.
• Allows automatic approval for foreign equity
investment up to 100% in the automotive sector and does not lay down any minimum investment criteria.
• lays emphasis on R & D activities carried out by
companies in India
• Weighted tax deduction of up to 150% for in-house
research and R & D activities.
• Formulation of an appropriate auto fuel policy to ensure
availability of adequate amount of appropriate fuel to meet emission norms
• Confirms the government’s intention on harmonizing the
State-of-the-art test facilities will support the growth of the auto industry
• The Government of India is
promoting National Automotive Testing and R&D Infrastructure Project (NATRIP) to support the growth of the auto industry in India of five independent and up gradation of existing test centres
New testing & homologation center at MANESAR New testing & New testing center homologation for tractors & offcenter at MANESAR road vehicles, accident data analysis and specialised driving training at RAE BAREILLY Up-gradation of VRDE at AHMEDNAGAR Up-gradation of ARAI at PUNE Hill Area driving training center and Regional InUse vehicle management center at SILCHAR
• NATRIP envisages setting up
New complete proving ground at INDORE
• Testing centres at
Manesar (Haryana), Chennai (Tamil Nadu), Pune (Maharashtra) • Proving ground at Indore (MP)
New test & homologation center near CHENNAI
Indian Automotive Industry
Government of India SIAM ACMA Automotive Mission Plan 2016
On 29.01.07, the Prime Minister released Automobile Plan 2006 -2016 to give a road map to Indian Automobile Industry Increase turnover to $145 billion by 2016 from $ 35 billion at present
Increase export revenue Provide employment to to $ 35 billion by 2016 from additional 25 million people $ 4.1 billion at present by 2016
By 2016, the Automotive sector is expected to contribute 10% of the country’s GDP and 30~35% of the Industry
Automotive Components Industry
Automotive Mission Plan 2016
ACMA VISION 20:20:1
Achieve $20 billion in Domestic Sales
Achieve $20 billion in Exports Sales
Create 1 million additional Jobs
India Advantage and business opportunities
Large and growing domestic demand Proven product Development • Demand growth expected to be capabilities around Capabilities to develop complete • 10 % CAGR making India one of the fastest growing markets vehicles and systems
Attractiveness of the Indian automotive industry
• More than 125 Fortune 500
(including large auto companies) have R&D centres in India acknowledged leadership in the IT industry
• Companies can leverage India’s
Export Potential • Increased outsourcing has led to a large potential to export components and vehicles to other markets High quality standards • 12 Indian component manufacturers have won the Deming Prize for quality • Most leading component manufacturers are QS and ISO certified
Indian Auto Industry Stable economic policies • Continuity in reforms and policies • India targets to emerge as the “manufacturing hub” for small cars
Competitive manufacturing cost •Implementation of VAT, has positioned India as one of the leading low cost manufacturing sources
Indian Automotive Industry - Growth Drivers
Higher GDP growth India’s huge geographic spread Increasing Road Development, Golden Quadrilateral Increasing disposable income with the service sector Easier finance schemes Replacement of aging four wheelers Graduating from Two wheeler to Four wheeler Increasing dispensable income of rural agri sector Growing Concept of Second Vehicle in Urban Areas
Two wheeler story could be repeated in the car segment
8 out of top 10 global companies have India presence
They contribute 60 % of global production but 25 % of India Production
The Motorization Process
Cars for 1.000 inhabitants in different countries
750 600 450 300 150
USA I taly Germany France J apan UK Poland S.Korea Brasil China I ndia
2006 813 673 597 595 593 571 385 322 124 23 12
• India has a low vehicle presence (with passenger car stock of only around 14 per 1,000 population in 2008), and so possesses substantial potential for growth. • Passenger car production in India is projected to cross three million units in 2014-15. • Sales of passenger cars during 2008-09 to 2015-16 are expected to grow at a CAGR of around10%. • Export of passenger cars is anticipated to rise more than the domestic sales during 2008-09 to2015-16. • Motorcycle sales will perform positively in future, exceeding 10 million units by 2012-13. • Value of auto component exports is likely to attain a double digit figure in 2012-13.
Key players in the Indian auto industry - Passenger Cars and Commercial vehicles
The largest player in the Indian industry. Plans to launch new and ex products in the Indian markets, including the ‘100,000’ car
Suzuki’s JV in India and the largest passenger car manufacturer in Ind
The third largest passenger car manufacturer in India and one of the largest exporters of vehicles. Has established India as one of its man bases in the world. Is planning to invest heavily to boost exports from
Has vision of capturing 10 % share of the Indian passenger car marke 2010 One of the leading players in the Indian premium cars segment
One of the leading players in the Indian premium cars segment
One of the leading players in the Indian premium cars segment. Plans to enter the small car segment by relaunching the Matiz One of the largest players in the UV / MUV segment
The 2nd largest CV manufacturer in India
Key players in the Indian auto industry - Two wheelers
The largest 2 wheeler manufacturer in the world and 1st in I
The 2nd largest 2- wheeler manufacturer in India and the largest 3 wheeler manufacturer. Has plans for establishing a manufacturing facility in Indonesia . The third largest 2 wheeler manufacturer in India. Has plans for establishing a manufacturing facility in Indonesia Has recently entered the Indian market through its direct subsidiary ( in addition to its JV – Hero Honda) Has recently entered the Indian market through its direct subsidiary
PAST PERFORMANCES & CURRENT TRENDS
Market share trends : 2003-04 to 2006-07 Medium & heavy commercial vehicles
Company TATA Motors Ashok Leyland Eicher motors Swaraj Mazda Man force Trucks Asian Motor works 03-04 04-05 63.26 31.58 4.62 1.20 --63.90 26.85 6.69 2.31 --05-06 60.55 30.12 6.27 2.50 -0.03 0607 60.24 32.03 5.62 1.70 0.08 0.02
• Light commercial vehicles
Company TATA Motors Eicher Motors Swaraj Mazda Force Motors Ashok Leyland 03-04 0405-06 06-07 48.05 05 52.36 61.82 64.22 33.31 26.41 5.86 5.31 2.66 0.50 4.85 3.37 2.68 0.85 26.75 4.25 2.47 2.03 0.26 6.25 6.40 6.41 0.62
Mahindra & Mahindra 32.26
• Passenger cars
Company Maruti Suzuki Hyundai TATA Honda Ford GM Benz Hindustan Motors 03-04 42.99 22.80 14.38 6.30 4.57 3.67 1.39 2.54 04-05 39.77 22.21 14.95 8.09 4.38 5.37 1.60 2.57 05-06 06-07 40.24 23.05 15.10 8.58 4.51 5.22 1.45 1.83 38.47 22.27 14.35 11.12 5.76 4.95 1.54 1.43
Company Mahindra & Mahindra TATA Force Motors Maruti Suzuki Hindustan Motors Toyota Kirloskar 03-04 38.61 19.83 4.10 1.91 0.85 33.71 04-05 05-06 39.25 21.09 4.27 1.98 0.17 32.44 42.50 22.29 4.26 1.55 0.15 29.26 06-07 38.78 25.27 4.36 1.05 0.59 29.96
Company Hero Honda Bajaj TVS Yamaha 03-04 04-05 05-06 48.80 24.03 14.64 6.24 52.16 27.98 11.69 4.88 50.80 32.31 10.86 3.98 06-07 48.48 34.72 11.17 3.94
• THREE WHEELERS
Company Bajaj Piaggio Mahindra & Mahindra Scooters India Atul Auto Force Motors 03-04 61.08 10.01 10.46 5.74 2.83 7.17 04-05 48.77 24.73 11.14 4.10 3.26 5.87 05-06 48.80 28.36 8.89 4.14 3.57 4.55 06-07 54.74 24.97 9.97 4.19 2.87 2.73
Maruti Suzuki :
New car plant to make 250,000 cars per annum (total 800,000 cars/annum) 10 new Component JVs to support new Diesel Engine Plant.
Increase capacity to 400,000 cars per annum over next 1 year.
Team up with Mahindra & Mahindra and Renault to invest in a $905 million car project in India, capacity to produce 400,000 units in seven years.
Tata Motors :
New plant to manufacture 100K car in West Bengal with an investment of US $ 0.24 Billion.
Target of 200,000 units capacity by 2010.
General Motors :
New Capacity to manufacture more small car like spark. – Nissan – Compact SUV
Very Competitive Market
• From 20 models available in year 1995 to 93 available today (Not
counting the variants)
• 60 new launches done in 2008
The $ 2,500 Car (The NANO)
Car & MUV production - Apr - Sep
1000000 900000 800000 700000 600000
Nos 7% growt 29% growt 28% growt 18% growth 14% growth
500000 400000 300000 200000 100000 0
Catg I -4% 2%
Growth over previous period growth
• AUTOMOBILE SALES ALL TIME LOW: declined by 18.2 % in December 2008. • THE TOTAL VECHICLE SALES IN DOMESTIC MARKET STOOD AT 5,97,622 (DEC 2008) WHERE AS IN PREVIOUS YEAR IT WAS 7,30,603 (DEC 2007). • VARIOUS AUTOMOBILE COMPANIES SHUT THEIR PLANT TEMPORARILY BECAUSE OF DEMAND NOT MEETING THE TOTAL PRODUCTION. • THE CUT IN EXCISE RATE (4%) ITS BENEFIT WAS DIRECTLY PASSED TO CUSTOMER. • ALL MAJOR COMPANIES REDUCED THE PRICES OF VECHICLES TO INCREASE DEMAND. • IN BAILOUT PACKAGE OF JANUARY GOVT INSTRUCTED GOVT. BANKS TO PROVIDE CREDIT TO NBFC’S (NON BANKING FINANCIAL
• Nov-2008 • Automobile industry reported one of its worst performance • Decline in sale of commercial vehicles by 48% & production by 57.3% • Sale of 2 wheelers fell by 9.2% • Sales of passenger cars & muvs fell by 8.2%
• Automobile industry is an established and an evergreen industry. • India is the strongest player in the small car segment of the global automobile market • Indian companies are the best cost innovators • The automotive industry has long been known for its development and promulgation of the assembly-line.
• Some of the greatest developments in the automotive supply chain lie in the development of Just-In-Time (JIT) inventory methods. • Through the use of advanced technologies, assembly line manufacturing, and JIT inventory management, the automotive industry has been able to achieve significant gains in productivity.
• Indian is lacking in proper infrastructure. • This is slowing the pace of growth of auto industry • Companies are not improving after sale services
• The automotive ecosystem is in the midst of significant change, with increasing challenges in consumer demands, technology development, and globalization. • While demand for incumbent technologies will remain strong, alternative power trains could capture more than 20 percent of the global market by 2020, depending upon boundary conditions such as fuel taxation and emissions regulation set by governments as well as oil price development. • storage is in the heart of the next generation of efforts for fuel economy. • More realistic scenario will emerge for technologies using Hydrogen as automotive fuel. • Intelligent use of NCES (Non conventional energy sources) for powering Public Transport.
• Global Crisis • Companies not focusing on R & D are under great risk • High competition from foreign players
SCOPE IN THIS INDUSTRY
• It comes under manufacturing industry. • We can join there in sales & marketing, H.R, Finance, supply chain mgt ,R&D as well as in operations department . • Good job opportunity is there. • Pay package is also very good .
• Automobile Industry in India is still in its developing stage. • The industry would have to develop vehicles which would have minimum impact on Air Quality and confirm to the Safety Norms with cost of fuel increasing rapidly. • The Industry would also need to provide energy solutions for economic activities to sustain. • When we compare 2020 with the present, we cannot think about the growth of the automobile enterprise without also paying attention to the safeguarding of the world environment. • In the next ten years, we will experience more change than in the 50 years before.
• The industry would not only need to address the technology challenges but also look at cost competitiveness and human resources challenges. • The policy makers would have to provide infrastructure to absorb the volumes that are expected to come into existence. • Challenges beyond 2016 would make it necessary for Private & Public Sector to join hands and come out with effective solutions for sustainable mobility
• Society of Indian Automobile Manufacturers (SIAM) • CMIE REPORT • INDIAN BRAND EQUITY FOUNDATION • AUTO CAR INDIA : ECONOMIC TIMES • GOOGLE • BUSINESS WORLD • TIMES OF INDIA • BUSINESS LINE • ECONOMIC TIMES
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