Вы находитесь на странице: 1из 37


Presented by, Richa Lather Sonali Sarkar Ankit Kumar Tiwari Prakhar Rajvanshi Gaurav Mehra



y Close relation with the auto mobile industry Emerged in the post liberalization period Exports of auto components from India have witnessed a CAGR of 27.3% over the last five years. The value of exports which was US$ 300 million in 1997 had grown to over US$ 2000 million in 2006.

The Growth Journey

Pre 1983
Closed market Growth of market limited by supply Outdated models Players Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

Japanisation - GOISuzuki joint venture to form Maruti Udyog Joint ventures with companies in commercial vehicles and components Players Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

Delicensing of sector in 1993 Global major OEMs start assembly in India (Toyota, GM, Ford, Honda, Hyundai) Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels Implementation of VAT

Era of globalisation and evolution of India as a global manufacturing hub

Auto Component Industry

Chennai and Pune are the traditional locations of the industry. Delhi and its surrounding areas are the new locations that came into existence mainly because of Maruti . The geographical spread of medium and large companies as per records of ACMA is as under
North region 161

Western region


Southern region


Eastern region



OEM s Tier 1 Tier 2

The table below shows segment-wise distribution of the auto component Industry www.acmainfo.com.
Organized Component Manufacturers Strengths
1.Higher production capacities 2. Captive OE market 3. Access to technology through tie ups 4. Quality standards 5. Potential to export 6. Improving quality consciousness of end users 1. High Investment in plant and machinery 2. Higher overheads 3. Higher rates of taxes and differential regional tax patterns 4. Limited domestic OE volumes

Unorganized Component Manufacturers

1. Low capital investment 2. Minimal overheads 3. Taxes and levies exemption (violation) 4. Poor regulation on sale of spurious parts 5. Price sensitivity of market 1.Sub normal quality 2.Obsolete technology 3. Low capital availability 4. Restricted growth potential


The Indian Auto Components Market

Original Equipment Manufacturers (OEMs) Replacement Parts Production and Distribution : e.g. Air filters, oil filers and replacement lights Rubber Fabrication : tyres, hoses, belts etc. Estimated component market size is US$ 6.7 bn The exports of auto components industry has grown at a rate of nearly 30 per cent CAGR over the last four years.

Market overview
The size of the auto components industry has been estimated at US$ 19 billion in 2008 09, growing at a compound annual growth rate (CAGR) of about 23 per cent over the previous five years. The industry is expected to grow to US$ 40 billion by 2016. Among the 6,400 players present in the Indian market, only 600 constitute the organised sector and contribute more than 77 per cent of the country s total production of auto components.


Europe USA Middle East Africa Asia Oceania Others Total


Percentage share of Total Exports

36.00 26.00 10.00 10.00 16.00 1.60 0.40 100.00

Second Hand Automobile Market

Used car market demand :1.4 million cars annually Market Structure : Organized : 10% Unorganized : 90% Vendor Based 30% Direct Dealings 70% Certified used car dealers in India are Maruti TrueValue, Honda Auto Terrace, Ford Assured, Toyota U Trust, Hyundai Advantage, Mahindra and Mahindras First Choice, General Motors - Chevrolet-OK Unorganized market lacks services like -warranties, OEM equipments, insurance and taxes Second hand market expected to grow at 12-15 per cent in the next five years to touch a robust 2.5 million units and a turnover of Rs 50 thousand crore Estimations are that 50 percent of the used cars sales will be brought under organized car market by 2013

Despite a relatively small share of Asia in the global pie, India is now amongst one of the most preferred destinations and has come to occupy the image of an exporting hub for most of the major global OEM players. Almost all the big auto manufacturers of the world are either already or are in the process of outsourcing from the country. Hyundai Motors India Export base for small cars Ford Motors India exporting CKDs of Ikon to South Africa and other countries Skoda India Hub for exports of cars to neighboring countries General Motors Global Purchasing Team Volvo Global buying team Delphi International purchase office Renault scouting for truck part suppliers

Global hub of auto components Why India? developing country low cost advantage (25-30%) skilled labour developing markets Problems FTA, RTA Tax, raw materials, poor infrastructure

Why China is at Top

Wage rates in China are 15 to 25 per cent lower than in India The flood started after the government lowered the import duty from 15 per cent in 2005 to 12.5 per cent in 2006 and 2.5 per cent the following year. Taking into consideration the cost of transport, Customs duty and others is a huge 45 per cent in China s favour An executive from one of the Chinese companies says their products are about 40-50 per cent cheaper than India-made products having the same quality standards

Advantage India
 Largest Two-Wheeler Manufacturer in the World  2nd Largest Tractor Manufacturer in the World  5th Largest Commercial Vehicle Manufacturer in the World  Largest Global Motorcycle Manufacturer is in India  4th Largest Car Market in Asia - crossed the 1 million mark

Leading position in the global economy Major countries producing auto components :- China, Mexico and Taiwan Key industry drivers:y Provides support to other industries(iron, steel, plastic, glass) y Huge investments in developing countries y Investment in R&D y Increased standard of living y Infrastructural developments

Key trends in the industry Global car sales in the road to recovery Auto production bases are shifting to Asia Profitability of auto makers is under pressure; innovation still not sacrificed green imperative for components Welcoming new players in the industry Long term partnerships The industry size, investments, exports etc., are showing an increasing CAGR The future of this sector shows tremendous growth opportunities (ASEAN Treaty)

Contd .

The Future Growth Drivers

Higher GDP Growth India's huge geographic spread- Mass Transport System Increasing Road Development Increasing disposable Income with the service sector Cheaper ( declining interest rates) & easier finance Schemes Replacement of aging four wheelers Graduating from two wheelers to four wheelers Increasing dispensable income of rural agri sector Growing Concept of Second Vehicle in Urban Areas


MICO y Diesel engines y CRDI based diesel systems y Collaboration with Bosch OMAX AUTO y Chassis manufacturing y Reduced operation costs (OMAX steel) SONA KOYO y Power steering systems y C-EPS systems CLUTCH AUTO y India s largest clutch manufacturer and exporter y OEM and replacement markets y TATA, Mitsubishi, Mahindra etc . Are the clients

Class Segregations
Three divisions are: 1. MNC s that operate with wholly owned subsidiaries or through units where they held the controlling stake. E.g.: Delphi & Visteon, Denso India & MICO. 2. Owned by Indian promoters/public with a minority stake of foreign collaborators. 3. Wholly owned by Indian promoters/public.
Sundaram Brake Linings(SBL) & Sundaram Fasteners Limited(SFL)

Quality Certifications
244 Companies with ISO-9000 Certification 11 Companies with IS-14000 Certification 107 Companies with QS-9000 Certification 4 Companies with TS 16949 2 Deming Prize Winning Companies

Political - Legal Factors

Boosted Economic Growth
1 year 6% cut in CENVAT, abolition of surcharge on income tax. Abolition of FBT, Reduction of excise duty on big cars. Encourage Urban Fleet Modernization
1-5 Years - Providing Special Auto-component Parks (SAP) and Special Economic Zones (SEZ) as in IT . Negative list of items and rules of origin in FTAs / RTAs. (ASEAN Free Trade Agreement) - SIAM recommended the government on extending excise and sales tax benefits to customers who opt for scrappage of their old vehicles 5-10 Years Effective Implementation and Uniform enforcement of GST Maintain a three tier tariff structure for raw materials, intermediate goods, finished goods. Revamp WTO compatible export promotional schemes like DEPB, EOU and EPCG schemes AMP Plan 2006-16 set by govt

Stunted Economic Growth

1 year Differential excise duty for small and big cars. Customs duty for imported cars including hybrid cars. Excise duty cut only for petrol driven trucks 1-5 Years Existing Complex labor laws( 45 Central acts and 16 associated rules) Not implementing country wide VAT Ambiguous policy in land acquisition for green field projects . 5-10 Years Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day) Absence of National Auto fuel Policy (NAFP)

Economic Factors
1 year
Increased access to credit and lower interest loans

1-5 year
Investment in Infrastructure spending can boost the commercial vehicles segment.

5-10 years
Growing working population (441 million people in 2015/16) Upward migration of household income levels (600 million people have annual income of more than $10,200) Middle class expanding by 30 - 40 million every year

Can propel growth

Economic Factors
1 year
Impact of delayed monsoon (85% of normal, subsequent impact on paddy cultivation) on rural demand.

1-5 year

5-10 years
Non- availability of supplier base with demanded capability (Quality and Quantity). Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day) Increase in crude oil price($ 35/barrel to $ 70/ barrel in 14 months).

Non-availability of Key raw material (like Steel) at cheap price. Possible increase of interest rates (by 2-2.5% BPLR) because of planned government borrowing.

Can Stunt Growth

Social Factors
Rapid Urbanization of semi urban regions Rising aspirational levels. Improvement in living standards of middle class Increased spending on Fashion & lifestyle comforts. Seeking Value for money- consumer behavior Increasing customer emphasis on aesthetics and comfort.

A perfect marriage of rise in disposable income and demographic dividend (From US$ 556 per annum US$ 1150 by 2015)

Compliance with OEM s Norms and auto manufacturers Pressures of Working Capital Resistance from Unions Conflicts with Collaborators Greater Inventory Costs High Logistics Costs
Difficulty in making suppliers to agree with their requirements


Best manufacturing practices Quality consciousness Strict Adherence to delivery schedules World-class testing and Validation facilities

Industry is exposed to cyclical downturns in the automobile industry High capital requirement R & D capabilities is not at par with global standards

Import duty fluctuations China Pressure on prices Downturns in automobile industry

The industry is globally cost effective Adheres to strict quality controls Has access to latest technology Provides support to critical infrastructure and metal industries Ability to cater to low volumesx

Sourcing hub for global auto majors MNCs focussing on low cost outsourcing opportunities India and China are the two major countries developing in this industry Developments in automobile industry
India offers more than 20% cost reduction to any client and hence Global OEMs tempted to outsource to India

Break through future trends

India will be a Automotive hub, led by small cars and auto component domains Export of automotive components to ASEAN,BRIC,EU and USA for OEMs as well as Aftermarket Booming Automobiles (Particularly cars) second sales and remodeling Increased deployment of IT-enabled Automobile support systems like GPS,ABS,ASR and Safety systems .

Quality Certification (Deming, Six Sigma,TQM,TS16949) amongst suppliers have attained critical mass and the entire market will follow to get quality certifications. Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisition services Alternate fuel (Bio fuel, electricity) and environment friendly green engines (Bharat emission norms)

www.acmainfo.com www.wikipedia.org www.siamindia.com www.ibef.org Ernst & Young Auto Track www.economywatch.com www.business-standard.com The Economic Times Hindu Business Line www.automobileindia.com automobiles.mapsofindia.com