Supply 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 to follow their customers to various locations around the world. They design and innovate 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-axle-suspension, seats, or cockpit but also for the management of second-tier 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.

Key statistics
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. 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 % 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

Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 [18] Motor Vehicle Production 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479 [18] Industry Revenue USD Million 24,379 26,969 30,507 32,383 33,342* [18] Exports (Units) 629,544 806,222 1,011,529 1,238,333 1,530,660

Year Exports (Revenue)

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 1,915 2,231 2,552 3,008 3,718*

[edit] Automobile Production

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

Automobile Sales
Type of Vehicle 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 [18] Passenger Vehicles 1,061,572 1,143,076 1,379,979 1,549,882 1,551,880 [18] Commercial Vehicles 318,430 351,041 467,765 490,494 384,122 [18] Three Wheelers 307,862 359,920 403,910 364,781 349,719 [18] Two Wheelers 6,209,765 7,052,391 7,872,334 7,249,278 7,437,670 Total 7,897,629 8,906,428 10,123,988 9,654,435 9,723,391

Automobile Exports
Type of Vehicle 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 [18] Passenger Vehicles 166,402 175,572 198,452 218,401 335,739 [18] Commercial Vehicles 29,940 40,600 49,537 58,994 42,673 [18] Three Wheelers 66,795 76,881 143,896 141,225 148,074 [18] Two Wheelers 366,407 513,169 619,644 819,713 1,004,174 Total 629,544 806,222 1,011,529 1,238,333 1,530,660

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. 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 country's capabilities, create a favorable 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 labor and capital, achieving scale and R&D enhancing capability and showcasing India's 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