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in
Automotive
September 2006
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Contents
Market Overview Government regulations & policy India Advantage and business opportunities
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AUTOMOTIVE
Market Overview
Market Overview Government regulations & policy India Advantage and business opportunities
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Market Overview
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 be the 7th largest market by 2016 The industry has emerged as a key contributor to the Indian economy
Vehicle sales in India in 2005 - 06 ( in mil)
0
Cars
2
CVs
4
Two wheelers
6
Three Wheelers
Source : SIAM
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Market Overview
17%
6730 3849 3965 4470 5430
8700
FY00
FY01
FY02
FY03
FY04
FY05
FY 06
Source : ACMA
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Market Overview
Global OEM
Indian OEM
Tata Motors Mahindra & Mahindra Bajaj Auto TVS Motors Hero Honda Bajaj Tempo Ashok Leyland
Global Suppliers
Indian Suppliers
Bharat Forge Sundram Fasteners Rane Group Shriram Pistons RICO Auto Sono Koyo Steering
The Indian auto industry is highly competitive with a number of global and Indian auto companies present
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Market Overview
South
Ashok Leyland Ford Hindustan Motors Mahindra & Mahindra Toyota Kirloskar Volvo Enfield Greaves Hyundai Tatra TVS Motors
East
Hindustan Motors Tata Motors
West
Ashok Leyland Atul Auto Bajaj Auto Daimler Chrysler FIATForce Motors GM Greaves Kinetic M&M Premier Skoda Tata Motors
Mumbai-Pune-Nasik Aurangabad
Hyderabad
Major automotive clusters - Mumbai-Pune-NasikAurangabad (West), Chennai -Bangalore-Hosur (South) and Delhi-Gurgaon-Faridabad (North)
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Market Overview
Exports are rising - India has the potential to become the global outsourcing hub
Vehicle Exports from India
600000 500000 400000 300000 60 50 40 30 20 10 0 CV Cars Exports (2005-06) 2 Wheelers 3 Wheelers %
25%
456 625 578 760
1400 1020
Units
200000 100000 0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
Indian vehicle exports have grown at a scorching rate of over 40 % over the last few years, while component exports have grown at around 25 % per annum. Key exporters include:
Maruti, Tata Motors, M & M and Hyundai for Passenger Cars and MUVs Tata Motors and Ashok Leyland for LCV / M & HCVs B Bajaj, TVS Motors and Hero Honda for 2 wheelers
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Market Overview
Government Policies
Cost Competitiveness
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Market Overview
0.87
Domestic Components
USD 13 - 15 bn
2015-16
Components Exports
USD 20 - 25 bn
0
0 5 10 $ Billion 15 20 25
10
Cars CVs Two wheelers
20
Three Wheelers
30
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lays emphasis on R & D activities carried out by companies in India Weighted tax deduction of upto 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
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Number of regulations
43 32 39 114
The key regulations that are likely to impact the auto industry in the future are:
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2004
2005
200 6
200 7
200 8
2009
2010
Crash requirements aligned with EU Mandatory Airbags Bharat Stage IV in Metros and Bharat Stage
III in rest of the country
India is expected to align its crash requirements and emission standards with European standards in the 2008 / 09 timeframe Presently Bharat Stage III ( Equivalent to Euro III) is mandated in Metros and other large cities and Bharat Stage II ( Equivalent to Euro II) for the rest of the country Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced in the large Indian metros around 2009 and Bharat Stage III in the rest of the country
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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
New testing & homologation center at MANESAR New testing center for tractors & off-road vehicles, accident data analysis and specialised driving training at RAE BAREILLY Up-gradation of VRDE at AHMEDNAGAR Up-gradation of ARAI at PUNE New complete proving ground at INDORE Hill Area driving training center and Regional In-Use vehicle management center at SILCHAR
independent and up gradation of existing test centres Testing centres at Manesar (Haryana), Chennai
(Tamil Nadu), Pune (Maharashtra) Proving ground at Indore (MP) Tractor testing facility at Rae Bareilly (UP)
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business opportunities
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India Advantage
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High quality standards 12 Indian component manufacturers have won the Deming Prize for quality Most leading component manufacturers are QS and ISO certified
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
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India Advantage
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Investment potential of upto USD 35 - 40 bn in this sector over the next 10 years Investments in the Indian automotive industry can be in various forms 100 % subsidiary - 100 % FDI through automatic route allowed in this sector JVs with local firms Technology support or sharing agreements
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India Advantage
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Key players in the Indian auto industry Passenger Cars and CVs
The largest player in the Indian industry. Plans to launch new and exciting products in the Indian markets, including the 100,000 car Suzukis JV in India and the largest passenger car manufacturer in India
The third largest passenger car manufacturer in India and one of the largest exporters of vehicles. Has established India as one of its manufacturing bases in the world. Is planning to invest heavily to boost exports from India
Has vision of capturing 10 % share of the Indian passenger car market by 2010
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India Advantage
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Key players in the Indian auto industry - Passenger Cars and CVs
One of the leading players in the Indian premium cars segment. Plans to enter the small car segment by re-launching the Matiz
Other global players who are in India / have plans for India include Volvo, Daimler Chrysler, BMW and Nissan Motors
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India Advantage
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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
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The India Brand Equity Foundation is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. The Foundations primary objective is to build positive economic perceptions of India globally India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel +91 124 401 4087, 4060 - 67 Fax +91 124 401 3873 Email j.bhuyan@ciionline.org Web www.ibef.org
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Disclaimer
This publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand Equity Foundation (IBEF). All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of knowledge and belief of IBEF and IMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF and IMaCS neither recommend nor endorse any specific products or services that may have been mentioned in this publication and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication.