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Indian Auto Component Industry– Opportunities Unbound
Presentation by:
Vinnie MehtaExecutive Director, ACMA
November 10, 2010; Taipei, Taiwan
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Automotive Component Manufacturers Association of India
• India: A Vibrant Economy
• Automotive Industry in India
• Auto Component Industry in India
• Capabilities & Challenges of Component Suppliers
• The Way Forward
• About ACMA
Agenda
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Automotive Component Manufacturers Association of India
India: A Vibrant Economy
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Automotive Component Manufacturers Association of India 4
India: On the Map
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Automotive Component Manufacturers Association of India
Area: 3.3 Million Sq. Area: 3.3 Million Sq. KmsKms
面積面積面積面積330萬平方公里萬平方公里萬平方公里萬平方公里
7th Largest Country 第七大國第七大國第七大國第七大國
28 States ││││28個邦個邦個邦個邦
Coastline: 7500 km
海岸線海岸線海岸線海岸線7500公公公公里里里里
主要城市主要城市主要城市主要城市: 孟買孟買孟買孟買, 加爾各答加爾各答加爾各答加爾各答, 清奈清奈清奈清奈, 班班班班加羅加羅加羅加羅, 海得拉巴海得拉巴海得拉巴海得拉巴
人口人口人口人口: 十十十十一億以上一億以上一億以上一億以上
語言語言語言語言: 印度語印度語印度語印度語, 英語及其他英語及其他英語及其他英語及其他21種正式種正式種正式種正式語言語言語言語言宗教宗教宗教宗教 : 印度教印度教印度教印度教(82.6%), 回教回教回教回教(11.4%), 基督教基督教基督教基督教(2.4%), 錫克敎錫克敎錫克敎錫克敎(2.0%), 佛佛佛佛教教教教(0.7%)
通貨通貨通貨通貨 : 印度印度印度印度 盧盧盧盧比比比比 (US$1 = INR 45)
Chennai清奈清奈清奈清奈
New Delhi新德里新德里新德里新德里
Mumbai孟買孟買孟買孟買
5
Kolkata
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Automotive Component Manufacturers Association of India
• Largest Democracy in the world – 1.18 billion people
• 4th largest GDP (PPP) and 11th largest GDP (Nominal)
• 2nd fastest growing economy (RBI estimate 2010-11 – 8.5%)
• 3rd largest investor base in the World
• Robust Legal and Banking Infrastructure
• Demographics of Youth – 50% under 25 years & 65% under 35 years
• Rural to Urban Migration - 140 million by 2020; 700 million by 2050
• 2nd largest pool of certified professionals and highest number of qualified
engineers in the world
India: A Vibrant Economy
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Automotive Component Manufacturers Association of India
61.478.2
111.5
149.2
291 279
181.3
253
27%
43%
34%
15%
-4%
40%
22%
0
50
100
150
200
250
300
350
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-10%
0%
10%
20%
30%
40%
50%
Imports(US $ bln) Growth rate(%)
Imports
52.763.8
83.5
103.1
182.6 177
124.6
163
21%
31%
-3%
12%
23%
31%
21%
0
20
40
60
80
100
120
140
160
180
200
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-5%
0%
5%
10%
15%
20%
25%
30%
35%
Exports(US $ Bln) Growth rate(%)
Exports
4.23.1
5.5
27.3
33
2.6
24.57
15.7
-16%
-26%
185%
56%
112%
11%
21%
0
5
10
15
20
25
30
35
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-50%
0%
50%
100%
150%
200%
FDI(US $ bln)# Growth rate(%)
FDI
75.4
107
142
252274
173.1
281
1369%
-10%
4%
62%
22%
42%
27%
0
50
100
150
200
250
300
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
FE Reserves* ( US $ bln) Growth rate(%)
FE Reserve
# Partly Estimated * As on May 19, 2010
Growing trade, Investments & Forex reserves…In US $ bn
In US $ bn
In US $ bn
In US $ bn
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Automotive Component Manufacturers Association of India
Automotive Industry in India
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Automotive Component Manufacturers Association of India 9
Significant Investments by OEMs
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Automotive Component Manufacturers Association of India
“INDIA ” – A Global hub for Compact CarsNew Plant Addition in the Last 1 Year
Increased local content - Creating Global CompetenceIncreased local content - Creating Global Competence
Maruti
� Capacity 250K
� Investment US $ 380 mln
Hyundai
� Capacity Increased to 600K cars
� Investment US $ 1 billion
Tata Motors
� Capacity 500K
� Investment US $ 240 mln
Toyota
� Capacity 200K
� Investment US $ 310 mln
Ford
� Capacity 200K
� Investment US$ 500 mln
General Motors
� Capacity 140K
� Investment $650 mln
Nissan-Renault
� Capacity 400K
� Investment USD 1 billion
VW
� Capacity 110K
� Investment US $ 750 mln
Honda
� Capacity 60K
� Investment $ 250 mln
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Automotive Component Manufacturers Association of India
Vehicle Production in India: 2009-2020
2,200
150120
200
10,230
420
40
5,100
670
360
710
100
0
500
1,000
1,500
2,000
2,500
3,000
Passenger vehicles
SCVs LCVs M&HCVs Two- & Three-wheelers
Tractors Construction equipments*
2009 2015 (E) 2020 (E)
470 –530
540 –600
30,000 –33,500
940 –1,050
170 –190
1,100–1,220
390
8,700 –9,700
22,100
*Includes backhoes, track excavators, wheeled loading shovels, vibratory rollers and lif tall
‘000 units
� India to be the 5 th largest vehicle manufacturers in the world by 2020 from current 7th
� Vehicle production in India is expected to grow by 3 fold from 2009 figure by 2020.
� SCV is expected to grow the fastest.
Source: ACMA - EY Vision 2020
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Automotive Component Manufacturers Association of India
Auto Component Industry in India
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Automotive Component Manufacturers Association of India
Auto Component Industry– Growth DriversG
R O
W T
H
D R
I V
E R
S
Availability of low-cost skilled manpower
Increasing demand forvehicles
Low-cost and high-qualitystandards
Policy initiatives to Promote growth in the
sector
� India generates about 0.4 million engineering gradu ates every year.� The cost of entry-level engineers is as low as US$ 8,000 per year.� India accounts for 26% of the world’s Engineering S ervice
Outsourcing (ESO)
� Vehicle production grew to ~ 14 million in 2009–10.� Global OEMs are entering India to set up their manu facturing base.
� India offers low labor costs.� This has resulted in a significant cost reduction a s opposed to
overseas production maintaining international quali ty standards.
� De-regulation and policy initiatives such as lower excise duties, realization of VAT, etc., have been implemented.
� FDI up to 100 per cent is permitted through the aut omatic route for manufacturers of automobiles and components.
Source: IBEF
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Automotive Component Manufacturers Association of India
Auto Component Industry: Size & Product Range
6.7 8.712
18 18.422
26
1529%
38%
20% 18%2%20%
25%
05
1015202530
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0%
10%
20%
30%
40%
Growth rate(%)
CAGR: 21%CAGR: 21%
Engine Parts31%
Drive Transmission & Steering Parts
19%
Equipments10%
Electrical Parts9%
Others7%
Suspension & Braking Parts
12% Body & Chassis12%
Turnover
Product Range
In U
S$ b
n
Source: ACMA - EY Vision 2020
� The Indian auto component industryhas an opportunity to tap a potential~ $ 110 bn by 2020.
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Automotive Component Manufacturers Association of India
Auto Component Industry – Exports & Exports Markets
CAGR: 21%CAGR: 21%
Exports market size
Exports market
� OEM/Trier-1: 80%
� Aftermarket: 20%
Profile of ExportsAfrica7.4%
Asia28.1%
Australia1.1%Europe
36.9%
N.America24.0%
S.America2.5%
In U
S$ b
n
Source: ACMA - EY Vision 2020
Exports could grow 6 fold by 2020Exports could grow 6 fold by 2020
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Automotive Component Manufacturers Association of India
1.41.9
2.53.6
5.2
6.8
8.245%
20%
33%
45%
30%31%
0.0
2.0
4.0
6.0
8.0
10.0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-100%
10%
20%
30%
40%
50%
Growth rate(%)
Imports market size
Auto Component Industry – Imports & Sources of Imports
CAGR: 34%CAGR: 34%
Import Sources
Asia54.34%
Australia0.22%
Europe36.03%
N.America8.28%
Africa0.20%
S.America0.92%
In US $ bn
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Automotive Component Manufacturers Association of India
Auto Component Industry Investments
CAGR: 20%CAGR: 20%
In U
S$ b
n
Source: ACMA - EY Vision 2020
Investments
~$ 2.5bn Investment is expected next year~$ 2.5bn Investment is expected next year
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Automotive Component Manufacturers Association of India
Increased Component Outsourcing from India
Indian Components already Driving on your Roads…Indian Components already Driving on your RoadsIndian Components already Driving on your Roads……
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Automotive Component Manufacturers Association of India
Vision 2020: The future
$ 30 bn
$ 69 bn
$ 110 bn
US
$ bn
* Imports is also included
Source: ACMA - EY Vision 2020
$ 3.8 bn
$ 9.4 bn
$ 26 - 29 bn
US
$ bn
� Turnover is expected to grow by 3 folds by 2020
Exports PotentialTurnover
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Automotive Component Manufacturers Association of India
Vision 2020: Domestic Auto Component Demand
4.3 8.4 12.825.7
60.6
100.2
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2009 2015(E) 2020(E)
Aftermarket OE
$ 30 bn
$ 69 bn
$ 108 -119 bn
In $
bn
23.5
17.1
25.6
6.410.7
17.1
2020(E)
Transmission & Steering
Suspension & Braking
Interior
Engine & Exhaust
Electronics & electrical
Body & structural
Component wise
46.9
4.34.312.8
21.3
6.44.3
2020(E)
Construction Equipments
Farm Equipments
2 & 3 Wheelers
HCV
LCV
SCV
Passengers cars
Category wise
* Imports is also included
Source: ACMA - EY Vision 2020
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Automotive Component Manufacturers Association of India
Capabilities & Challenges of Component Suppliers
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Automotive Component Manufacturers Association of India
Advantage India
Growing domestic Demand for vehicles
•Growing per capita income and demandfor skilled manpower
•Vehicle production is expected to grow three-fold in the next decade
Potential R&D hub
•India has starting toprove its product development capabilityin mass market vehicles
•NATRiP was set up at a cost of US$ 380 million to promote R&D in the sector.
Proximity to EU/MEA
•Cost effectiveshipments from Indiacompared to thosefrom other distantLCCs.
•Many major EU vehiclemanufacturers haveset up operations in India with localsupply base.
Global Standards
•Indian companies
compliant in global
automotive standards,
e.g., JIS, DIN.
•Intn’l manufacturers
are building platforms
looking at domestic
and exports markets
Cost Effectivemanufacturing base
•Increasing
economies of scale
- Low PD cost
- Local Supply Base
- Low Labor Cost
Source: E&Y, IBEF,SIAM
Auto Component Industry– Advantage India
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Automotive Component Manufacturers Association of India
Indian Auto Component Industry Focus: Global Best Practices
Largest Deming Prize Award winning companies outsid e JapanLargest Deming Prize Award winning companies outsid e Japan
11
15
32
99
208
445
562
Deming Award
TPM Award
QS 9000
OHSAS 18001
ISO 14001
TS 16949
ISO 9000
JIPM - 3 Japan Quality Medal - 1Shingo Silver Medallion - 1
Modern shop-floor practices• 5-S; 7-W• Kaizen• TQM• TPM• 6 Sigma• Lean Manufacturing
More than 600 members
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Automotive Component Manufacturers Association of India
Design & engg. skills
Manufacturing skills
Manpowercost
Domestic demand
Commercial environment
Supplier base
Raw material
Infrastructure
Korea 1 1 7 9 1 3 2 1
China 4 4 1 2 12 3 1 4
Thailand 8 11 7 8 1 6 11 2
Indonesia 8 7 3 9 5 7 11 11
Vietnam 13 13 7 14 5 12 15 11
Czech 1 1 7 9 5 1 6 3
Romania 13 13 7 6 10 14 13 15
Poland 8 9 15 8 3 8 13 6
Slovakia 11 4 7 14 5 10 6 5
Russia 5 11 3 1 10 14 3 8
Hungary 3 9 7 2 12 13 10 8
Turkey 13 7 6 9 3 8 5 8
Brazil 6 4 7 2 15 3 9 6
Mexico 12 13 3 6 5 10 4 13
India 6 3 1 2 12 1 6 13
Eas
t Asi
aE
aste
rn E
urop
e
India is less competitiveIndia is more competitive India is comparable
Latin
A
mer
ica
Note: Number inside each cell indicates country ra nking
Other supporting factors
India is more competitive India is comparable India i s less competitive
A comparison between India vis-a-vis other
Source: ACMA - EY Vision 2020
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Automotive Component Manufacturers Association of India
Indian Component Industry Development Capability
During the development process, Tata Motors asked suppliers to think out of the box and innovate products and process design.
This approach has resulted in 37 patents being filed to cover innovations in the car and has given Indian Engineers a canvas to showcase their skills and capabilities.
“Hyundai i20, Made in India with European Design feel”
Hyundai exported 286K cars last year with a focus on Europe
Indigenization levels for high volume cars are at 8 0-90%Indigenization levels for high volume cars are at 8 0-90%
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Automotive Component Manufacturers Association of India
Some Design & Research Centers in India
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Automotive Component Manufacturers Association of India
Challenges in the Auto Component Industry
1. Raising Capital to meet the growth trajectory
2. Scaling Capacities ahead of the demand
3. Infrastructure Deficit & Cost – Energy & Logistics
4. Maintain productivity gains ahead of inflation
5. Availability of Skilled Manpower
6. Build R&D Competence
7. Develop Managerial Depth across Tiers of the Industry
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Automotive Component Manufacturers Association of India
Indo -Taiwan Auto Component Trade
• Insignificant Trade/between between India and Taiwan
• A Few Taiwanese Companies operating through their Indian
partners; e.g.
� Sunworld Industrial Co. Ltd – Tensioner, Fuel cock, oil pump etc.
� LIN Electricals Pvt Ltd – Auto electrical parts, relays etc.
� Taigene Electric Machinery Co. Ltd. – Auto electrical parts
� TYC – Lighting parts
� Steady Stream Business co – Molds and Dies
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Automotive Component Manufacturers Association of India
The Way Forward
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Automotive Component Manufacturers Association of India
Areas of Cooperation
1. Taiwanese SMEs can invest in green-field manufacturing in India to meet growing domestic demand for auto-components especially Telematics /auto-electronics.
2. Opportunities for Partnerships with Indian SMEs - Product and “Process Technology”.
3. Opportunity for Strategic Alliance to cover Global customers
4. Joint R&D with Indian companies for new product development and designing
5. Institutional cooperation e.g. ITRI of Taiwan with Indian IITs.
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Automotive Component Manufacturers Association of India
The Addressable Opportunity…
• Business opportunities in areas of technology
- Auto Electronics & Electrical
- Informatics & Telematics
- Simulation Technology
• Collaboration for Manufacturing Excellence, Quality and Process
Design
• Partnering for Global Requirements
• Explore newer Areas - Environment
• Merger & Acquisition
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Automotive Component Manufacturers Association of India
Conclusion
• Vibrant Indian Economy
• Automotive Industry showing double digit growth in all segments
• India fast becoming Global and Regional hub for vehicle programmes
• Vision 2020: A USD 110 Billion auto component industry
• Growing engineering and IT capability for designing & manufacturing
• Auto Component Industry :Culturally compatible Values
• Opportunity to partner in product & process innovation
India : A Gateway to GrowthIndia : A Gateway to Growth
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Automotive Component Manufacturers Association of India
About ACMA
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Automotive Component Manufacturers Association of India
Introduction
Automotive Component Manufacturers Association of India
Role
Members
Quality System
Re-Christened
Inception
An apex agency of the Indian Automotive Industry
600+ companies forming majority of the auto component output in the organized sector
ACMA operates on Quality System basedon ISO 9001:2000
In the year 1959 as The All India Automobile & Ancillary IndustriesAssociation (AIA & AIA)
As Automotive Component Manufacturers Association of India in the year 1982
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Automotive Component Manufacturers Association of India
ACMA membership
(More th
an 600 members)
46
51
82
179
245
> 100 Million US $
> 50 ~ 100 Million US $
> 25 ~ 50 Million US $
> 5 ~ 25 Million US $
< 1 ~ 5 Million US $
Annual Turnover
ACMA Membership
More than 70% of Companies are SMEsMore than 70% of Companies are SMEs
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Automotive Component Manufacturers Association of India
Collection &Dissemination ofInformation
QualityEnhancement
TechnologyUp-gradation
Promotes IndianAutomotive Component Industry
Vital Catalyst for Industrial Development
Trade Promotion
ACMA and Its Services
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Automotive Component Manufacturers Association of India
Promote India as a Brand
Promote India as a Brand
Organize Business Development Delegation
Overseas
Organize Business Development Delegation
Overseas
Undertake ExportPromotional Projects
Undertake ExportPromotional Projects
Organize Participation in Overseas Automobile
Exhibitions & Fairs
Organize Participation in Overseas Automobile
Exhibitions & Fairs
Global Interaction through
Counterpart Association
Global Interaction through
Counterpart Association
Dissemination of Export Enquiries Dissemination of
Export Enquiries
Organize Private Exhibitions &
Suppliers Conference
Organize Private Exhibitions &
Suppliers Conference
Facilitate potentialBusiness Partnership ofJV / Strategic Alliance
Facilitate potentialBusiness Partnership ofJV / Strategic Alliance
Providing International
Sourcing Forums
Providing International
Sourcing Forums
Working closelywith IPOs in IndiaWorking closelywith IPOs in India
International Business Development
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Automotive Component Manufacturers Association of India
ACMA Center for Technology
ACMA Center for Technology (ACT)
Support ACMA Activities
To establish World Class shop floor
In house ACT Journal
To support and update members on Standardization
and Technology interventions
Cluster Approach ACT Publication Technology Up gradation
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Automotive Component Manufacturers Association of India
ACMA Head OfficeThe Capital Court, 6th Floor, Olof Palme Marg, Munirka, New Delhi – 110 067
Tel: 011-26160315, 26175873, 74,Fax: 011-26160317E-mail: [email protected], Website: www.acmainfo.com
The Automotive After Market and ServiceExposition
…….. BE A PART OF IT.. BE A PART OF IT
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Automotive Component Manufacturers Association of India
Thank YouThank YouThank YouThank You
for any assistance contact [email protected]