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AUTO COMPONENT INDUSTRY

Presented By: Jagmohan Singh Mainak Aggarwal Saurabh Chaudhary Varun Keservani

Introduction-Auto Component Industry


Auto Components India has the most competitive auto parts manufacturing industry in the world, with Indian automotive components being widely preferred by major automobile manufacturing companies. The auto component companies in India are contributing to the growth of this sector by providing genuine, cheap and reasonably priced automotive parts. The Indian automotive components industry has actively and quickly transformed from a domestic market supplier, to one of the essential auto parts supplier in the world.

The Indian auto component sector has been growing at 20 per cent a year since 2000 and is projected to maintain the high-growth phase of 15-20 per cent till 2015.

Evolution of Auto Components industry


In 1961 Hindustan Motors develop the auto components which was the initial stage of the components industry

In 1981,Maruti Motors tie up with Suzuki that gave real impetus to growth of auto component industry

Classification and Structure of Auto Component Industry

An auto component industry can be segmented on the basis of the production of component types as below Engine Parts Drive Transmission and Steering Parts Suspension and Brake Parts Electrical Parts Equipments Other Parts

Structured of Auto Component Industry in India


Indian companies without any collaboration or having very minimal collaboration with any foreign companies for e.g. Sundram Brake Lining, Sundram Fastners. Indian companies with foreign collaboration, such as Indian Nippon Electricals, Hinoday etc.

MNCs completely owned subsidiaries or the units in which they have major control. For e.g. Delphi, Visteon, Denso, MICO etc.

Classification and Structure of Auto Component Industry

An auto component industry can be segmented on the basis of the production of component types as below Engine Parts Drive Transmission and Steering Parts Suspension and Brake Parts Electrical Parts Equipments Other Parts

Auto components Investments in India


Auto parts maker Robert Bosch of Germany will invest US$ 201.4 million in its Indian subsidiaries over the next two years. Bulk of the investment will be in Motor Industries Co Ltd (Mico) -- the Bosch flagship in India. Japanese electronic major Hitachi Ltd is planning to start auto component manufacturing in India when its OEMs-Isuzu Motor and Nissan Motor--start manufacturing their cars in India. GKN Driveline, an arm of UK-based auto component company GKN, plans to open a new manufacturing facility in India. Dubai-based auto ancilliary major Parts International Company has plans to invest approximately US$ 3.6 million in India over three years. This includes setting up a manufacturing facility meant to service exports to CIS and SAARC countries.

Global auto giant Toyota is looking to set up a gearbox manufacturing plant in India to serve the Asian market.
German automotive systems supplier Continental AG has begun formal operations in India by setting up a liaison office in Gurgaon and a technical centre in Bangalore.

Leading Manufacturers

Motor Industries Company of India Bharat Forge Sundaram Fasteners Wheels India Amtek Auto Motherson Sumi Rico Auto Subros

Source:-EY

Government Initiatives
Setting up of the National Automotive Testing and R&D Infrastructure Project (NATRIP) at a total cost of US$ 388.5 million for enabling the industry to usher in global standards of vehicular safety, emission and performance standards.

Finalization of the Automotive Mission Plan (AMP) 2006-2016 for making India a preferred destination for design and manufacture of automobile and automotive components.
The reduction in customs on key metallic raw materials and inputs for the auto-component industry. Reduced excise duty

20102011

SWOT ANALYSIS

STRENGTHS
Cost competitiveness in terms of Labour and Raw material Established manufacturing base Qualified and skilled man power Growing domestic automotive industry Manufacturing capabilities with International quality standards High operational efficiency

WEAKNESSES
1. Low investment in Research and Development
2. Limited knowledge of product 3. Limited domestic market for various components inhibiting

capacity creations.
4. Comparatively poor infrastructure for supply chain and exports 5. Lack of experience in system integration

OPPORTUNITIES
The growing need to outsource Continuous pressure on global OEMs and Tier 1s to reduce cost and source from low cost countries

Higher frequency of introducing of newer models by automakers

Global market opportunity itself is the ultimate opportunity provided by auto industry. Leverage on product engineering expertise to improve the worthiness and exports of auto component.

Auto component industry in India has potential to grow at a CAGR of 13% to reach US$40 billion by 2015. Exports projected to grow at over 30% p.a. India amongst the most competitive manufacturers of Auto Components; especially-Metal Intensive

components: Forgings, Stampings, Castings


- Skilled Labour-intensive components Potential of over US$5 billion for investment in India. Announcement of 'Automotive Mission Plan'

THREATS
Competition from other low cost countries Expansion of the European Appreciation of Rupee

Developments of new technologies


Large number of OEMs entering in Indian market may result into migration of talents from supplier to OEMs

Competition
Auto components exports from India form a small percentage of the global exports market. India is not alone in developing its auto component industry to take advantage of growing exports business. Countries like Thailand, Turkey, and Mexico are trying hard to become a Detroit in their respective regions. China has been trying to replicate its success in capital goods manufacturing to the automotive segment. All leading automakers have either entered or are queuing up to enter Chinas large vehicle market. A growing Chinese vehicle market is both a challenge and an opportunity to the Indian auto components manufacturers.

Strategies to Compete
One obvious way for the Indian manufacturers to compete in the global export markets is to focus on their current areas of strength. As the industry continues to grow with new export orders from automakers some strategies that Indian manufacturers can adopt to gain success in these markets include:

Identify products where there is continued aftermarket demand for older technologies, even though the original equipment market has moved forward. For example, tire manufacturers export cross ply tires to the developed world as the manufacturing has moved on to radial. Focus on low volume products and niche vehicle segments like offroad vehicles in U.S. and Europe that will provide good volumes for Indian manufacturers. Continue to build strong relationships with existing original equipment customers.