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Automotive
September 2006
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Contents
• Market Overview
• Government regulations & policy
• India Advantage
and business opportunities
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Market
Overview
• Market Overview
• Government regulations & policy
• India Advantage and business opportunities
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Market Overview
• 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
0.36
US$ 34 billion
7.05 in 2006
0.35
1.14
0 2 4 6 8
Cars CVs Two wheelers Three Wheelers
Source : SIAM
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Market Overview
Source : ACMA
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Market Overview
Market Overview
Market Overview
600000 60
100000 10
FY00 FY01 FY02 FY03 FY04 FY05 FY06
0 0
CV Cars 2 Wheelers 3 Wheelers
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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Market Overview
New Increasing
Contemporary Growth in
products product Indian Automotive consumer
Income levels
launches Industry demand Easier financing
Shorter life cycle
Export
Competitiveness
Reduced cost Cost Competitiveness
to consumer
India emerging as a
manufacturing hub
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Market Overview
0.87
27.8
Domestic USD 13 - 15 bn 2015-16
Components 0.64
2.65
Components USD 20 - 25 bn
Exports
0 10 20 30
0 5 10 15 20 25
$ Billion Cars CVs Two wheelers Three Wheelers
• The Indian auto component industry is • The size of the Indian automotive industry is
well positioned to capitalise on the growth expected to grow at 13% p.a over the next
in outsourcing to low cost countries decade to reach around USD 120 - 159 bn
by 2016.
• Exports would lead the growth in the
component industry, which is expected to • The total investments required to support the
be around USD 33- 40 bn by 2015 growth is estimated at around USD 35 - 40 bn
Government
regulations and policy
• Market Overview
• Government regulations & policy
• India Advantage and business opportunities
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• Weighted tax deduction of upto 150% for in-house research and R & D activities
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
Number of
Status of Indian Regulation
regulations
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
2 2 200 2 2 2
2004 009 010
005 006 7 008
• Crash requirements aligned with EU • India is expected to align its crash requirements and emission
standards with European standards in the 2008 / 09
• Mandatory Airbags timeframe
• Bharat Stage IV in Metros and Bharat • Presently Bharat Stage III ( Equivalent to Euro III) is
Stage III in rest of the country 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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Competitive
manufacturing cost
Stable economic policies •Implementation of VAT, has
• Continuity in reforms and policies positioned India as one of the
• India targets to emerge as the leading low cost
“manufacturing hub” manufacturing sources
for small cars
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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
Other global players who are in India / have plans for India include -
Volvo, Daimler Chrysler, BMW and Nissan Motors
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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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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
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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
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