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Automotive
September 2006

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Contents
Market Overview
Government regulations & policy
India Advantage
and business opportunities

AUTOMOTIVE

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Market
Overview
Market Overview
Government regulations & policy
India Advantage and business opportunities

AUTOMOTIVE

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AUTOMOTIVE

Market Overview

Profile: Indian Automotive Industry

The industry has grown at a CAGR of 14% p.a over the last 5 years,
with sales of 9 million vehicles in 2005-06

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

Size of around
US$ 34 billion
in 2006

2
Cars

Source : SIAM

4
CVs

Two wheelers

6
Three Wheelers

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AUTOMOTIVE

Market Overview

Auto components industry has

also grown at a rapid pace ...
The Indian auto components

Size of Component Industry (US$ mn)

10000
8700

17%
6730
3849

3965

FY00

FY01

Source : ACMA

4470

FY02

Market breakup: OEM demand

5430

FY03

industry has grown at 17%

CAGR over the last few years
to reach a size of around
US$ 10 billion in 2005-06
~ 54%, replacement market
~30%, exports ~16%

FY04

FY05

FY 06

FY refers to Financial Year April to March

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AUTOMOTIVE

Market Overview

Players: Indian auto industry

GM
Toyota
Ford
Hyundai
Maruti Suzuki
Honda
Skoda
Volvo
Mercedes

Delphi
Visteon
Bosch
Denso
Valeo
Thyssen Krupp

Indian
Auto
Industry
Global
OEM

Indian
OEM

Global
Suppliers

Indian
Suppliers

Engineering &
Development
Companies

The Indian auto industry is highly competitive

with a number of global and Indian auto companies present

Tata Motors
Mahindra & Mahindra
Bajaj Auto
TVS Motors
Hero Honda
Bajaj Tempo
Ashok Leyland

Bharat Forge
Sundram Fasteners
Rane Group
Shriram Pistons
RICO Auto
Sono Koyo Steering

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AUTOMOTIVE

Market Overview

Automotive clusters in India

Delhi-Gurgaon-NoidaGhaziabad
Ludhiana

Haridwar

Pitampur
Jamshedpur
Rajkot-Halol

Mumbai-Pune-Nasik
Aurangabad

Kolkata

Hyderabad

Chennai Bangalore Hosur

Source: SIAM, IMaCS analysis

North / Central

South

Ashok Leyland
Force Motors
Hindustan Motors
Honda SIEL
Kinetic
Majestic
Piaggio
Swaraj Mazda

Ashok Leyland
Ford Greaves
Hindustan Motors
Mahindra & Mahindra
Toyota Kirloskar
Volvo

Eicher
Hero Honda
Honda
ICML
LML
Maruti Suzuki
Yamaha
Tata Motors

East

West

Hindustan Motors
Tata Motors

Ashok Leyland
Bajaj Auto
FIAT
GM Greaves
M&M
Skoda

Enfield
Hyundai
Tatra
TVS Motors

Atul Auto
Daimler Chrysler
Force Motors
Kinetic
Premier
Tata Motors

Major automotive clusters - Mumbai-Pune-NasikAurangabad (West), Chennai -Bangalore-Hosur (South) and

Delhi-Gurgaon-Faridabad (North)

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AUTOMOTIVE

Market Overview

Exports are rising - India has the potential

to become the global outsourcing hub
600000

60

500000

50

400000

40

300000

Export of auto components

(USD million )
1,800

25%

30

200000

20

100000

10

456

625

578

FY00

FY01

FY02

760

FY03

1400
1020

FY04

FY05

FY06

0
CV

Cars
Exports (2005-06)

2 Wheelers

3 Wheelers

Growth rate ( 4 year CAGR)

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
Bajaj, TVS Motors and Hero Honda for 2 wheelers

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AUTOMOTIVE

Market Overview

Growth drivers for the

Indian automotive industry

Government
Policies

Contemporary
products

Shorter life cycle

New
product
launches

Export
Competitiveness
Reduced cost
to consumer
India emerging as a
manufacturing hub

Indian Automotive
Industry

Cost Competitiveness

Overall economic
growth
Lower duties & taxes

Increasing
consumer
demand

Growth in
Income levels
Easier financing

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AUTOMOTIVE

Market Overview

Growth potential of the

Indian automotive industry
Projected size of Auto Components industry - 2015

USD 13 - 15 bn

Domestic
Components

2015-16

USD 20 - 25 bn

Components
Exports

0
0

10

15

20

$ Billion

The Indian auto component industry is

well positioned to capitalise on the growth
in outsourcing to low cost countries

Exports would lead the growth in the

component industry, which is expected to
be around USD 33- 40 bn by 2015

Source: AMP Vision, ACMA Vision

10

20

30

25

Cars

CVs

Two wheelers

Three Wheelers

The size of the Indian automotive industry is

expected to grow at 13% p.a over the next
decade to reach around USD 120 - 159 bn
by 2016.

The total investments required to support the

growth is estimated at around USD 35 - 40 bn

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AUTOMOTIVE

Government
regulations and policy
Market Overview
Government regulations & policy
India Advantage and business opportunities

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AUTOMOTIVE

Government regulations & policy

Policies relating to the sector:

Auto Policy
In 2002, the Indian government formulated an auto policy that aimed at promoting
integrated, phased, enduring and self-sustained growth of the Indian automotive industry

allows automatic approval for foreign equity investment upto 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 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

confirms the governments intention on harmonising the regulatory standards

with the rest of the world

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AUTOMOTIVE

Government regulations & policy

Automotive regulations in India

Indian automotive regulations are closely aligned to the ECE regulations. The table below shows the
level of alignment of the Indian regulations with the ECE regulations

Status of Indian Regulation

Number of
regulations

Fully / Partially aligned

43

In process of being aligned

32

Items / Regulations to be covered

39

Total

114

The key regulations that are likely to impact the auto industry in the future are:

Crash Related Regulations

Introduction of Bharat Stage IV norms

Source: IMaCS Analysis

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AUTOMOTIVE

Government regulations & policy

Trends in future regulations

Safety and Emission related
Regulation Road Map Targets
Industry challenges to development
Better vehicles: safer and more
environment friendly

2004

200
5

Crash requirements aligned with EU

Mandatory Airbags
Bharat Stage IV in Metros and Bharat
Stage III in rest of the country

Approach

Harmonization with ECE standards

Homologation and Certification
testing agencies and centres

200
6

200
7

2008

200
9

2010

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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AUTOMOTIVE

Government regulations & policy

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

NATRIP envisages setting up of five

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)
Hill Driving Training Centre at Silchar (Assam)

New testing &

homologation center
at MANESAR
Hill Area driving
training center and
Regional In-Use
vehicle
management
center at
SILCHAR

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

New test &

homologation
center near
CHENNAI

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AUTOMOTIVE

India Advantage and

business opportunities
Market Overview
Government regulations & policy
India Advantage and business opportunities

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AUTOMOTIVE

India Advantage and business opportunities

Attractiveness of the Indian

automotive industry
Large and growing domestic demand
Demand growth expected to be around
10 % CAGR making India one of the fastest
growing markets

Export Potential
Increased outsourcing has led to
a large potential to export
components and vehicles
to other markets

Proven product Development

capabilities

Capabilities to develop complete vehicles

and systems

More than 125 Fortune 500 (including large

auto companies) have R&D centres in India

Companies can leverage Indias

Indian
Auto
Industry

High quality standards

12 Indian component
manufacturers have won the
Deming Prize for quality
Most leading component
manufacturers are QS and
ISO certified

acknowledged leadership in the IT 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

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AUTOMOTIVE

India Advantage and business opportunities

Opportunities in the Indian

automotive sector
Domestic Opportunities

Participate in domestic growth

opportunities

Indian
Automotive
Sector

Global outsourcing
Opportunities

Exports of vehicles
Exports of components
Engineering and Design
Services

Potential investors can capitalise on opportunities both in the domestic

and export oriented segments

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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AUTOMOTIVE

India Advantage and business opportunities

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

One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment

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AUTOMOTIVE

India Advantage and business opportunities

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

One of the largest players in the UV / MUV segment

The 2nd largest CV manufacturer in India

Other global players who are in India / have plans for India include Volvo, Daimler Chrysler, BMW and Nissan Motors

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AUTOMOTIVE

India Advantage and business opportunities

Key players in the Indian auto

industry - Two wheelers
The largest 2 wheeler manufacturer in the world

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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AUTOMOTIVE

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AUTOMOTIVE

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Disclaimer
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