indian automotive industry seept 2006
TRANSCRIPT
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AutomotiveSeptember 2006
www.imacs.in
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AUTOMOTIVEwww.imacs.in
Market Overview
Government regulations & policy
India Advantageand business opportunities
Contents
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MarketOverview Market Overview
Government regulations & policy
India Advantage and business opportunities
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Profile: Indian Automotive Industry
Vehicle sales in India in 2005 - 06 ( in mil)
1.14
0.35
7.05
0.36
0 2 4 6 8
Cars CVs Two wheele rs Three Wheelers
The industry has grown at a CAGR of 14% p.a over the last 5 years,
with sales of 9 million vehiclesin 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 7 th largest market by 2016
The industry has emerged as a key contributor to the Indian economy
Source : SIAM
Size of around
US$ 34 billionin 2006
Market Overview
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Auto components industry hasalso grown at a rapid pace ...
Size of Component Industry (US$ mn)
3849 39654470
5430
6730
8700
10000
FY00 FY01 FY02 FY03 FY04 FY05 FY 06
17%
The Indian auto components
industry has grown at 17%
CAGRover the last few years
to reach a size of around
US$ 10 billion in 2005-06
Market breakup: OEM demand
~ 54%, replacement market
~30%, exports ~16%
Source : ACMA
FY refers to Financial Year April to March
Market Overview
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Players: Indian auto industry
Global
OEM
Indian
OEM
IndianSuppliers
GlobalSuppliers
Engineering &DevelopmentCompanies
IndianAuto
Industry
GM
Toyota
Ford Hyundai
Maruti Suzuki
Honda Skoda Volvo
Mercedes
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
Delphi Visteon
Bosch Denso
Valeo Thyssen Krupp
The Indian auto industry is highly competitive
with a number of global and Indian auto companies present
Market Overview
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Delhi-Gurgaon-Noida-Ghaziabad
Kolkata
Mumbai-Pune-NasikAurangabad
Jamshedpur
Chennai Bangalore Hosur
Rajkot-Halol
Hyderabad
Ludhiana Haridwar
Pitampur
Automotive clusters in India
Ashok Leyland Enfield
Ford Greaves
Hindustan Motors Hyundai
Mahindra & Mahindra Tatra
Toyota Kirloskar TVS Motors
Volvo
Ashok Leyland Eicher
Force Motors Hero Honda
Hindustan Motors Honda
Honda SIEL ICML
Kinetic LML
Majestic Maruti Suzuki
Piaggio Yamaha
Swaraj Mazda Tata Motors
North / Central
Ashok Leyland Atul Auto
Bajaj Auto Daimler Chrysler
FIAT Force Motors
GM Greaves Kinetic
M & M Premier
Skoda Tata Motors
WestHindustan Motors
Tata Motors
East
South
Source: SIAM, IMaCS analysis
Major automotive clusters - Mumbai-Pune-Nasik-Aurangabad (West), Chennai -Bangalore-Hosur (South) and
Delhi-Gurgaon-Faridabad (North)
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Exports are rising - India has the potentialto become the global outsourcing hub
Vehicle Exports from India
0
100000
200000
300000
400000
500000
600000
CV Cars 2 Wheelers 3 Wheelers
0
10
20
30
40
50
60
Exports (2005-06) Growth rate ( 4 year CAGR)
Indianvehicle exports have grown at a scorchingrate of over 40 % over the last few years, whilecomponent 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
Export of auto components
(USD million )
456625 578
760
1,800
1020
1400
FY00 FY01 FY02 FY03 FY04 FY05 FY06
25%
Market Overview
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Growth drivers for theIndian automotive industry
Contemporaryproducts
Shorter life cycle
Growth inIncome levels
Easier financing
Government
Policies
Newproductlaunches
Indian AutomotiveIndustry
Increasingconsumer
demand
Cost Competitiveness
Overall economicgrowth
Lower duties & taxes
ExportCompetitiveness
Reduced costto consumer
India emerging as amanufacturing hub
Market Overview
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Growth potential of theIndian automotive industry
Potential Vehicle sales in India in 2015 - 06 ( in mn)
2.65
0.64
27.8
0.87
0 10 20 30
2015-16
Cars CVs Two wheelers Three Whee lers
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
0 5 10 15 20 25
Components
Exports
Domestic
Components
$ Billion
USD 20 - 25 bn
USD 13 - 15 bn
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
Projected size of Auto Components industry - 2015
Source: AMP Vision, ACMA Vision
Market Overview
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Governmentregulations and policy Market Overview
Government regulations & policy
IndiaAdvantage and business opportunities
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Policies relating to the sector:Auto Policy
In 2002, the Indian government formulated an auto policythat 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
Government regulations & policy
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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
Source: IMaCS Analysis
The key regulations that are likely to impact the auto industry in the future are:
Crash Related Regulations
Introduction of Bharat Stage IV norms
Government regulations & policy
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Trends in future regulations Safety and Emission related
2
009
2
008
2
0062004
200
7
2
005
2
010
Crash requirements aligned with EU
Mandatory Airbags
Bharat Stage IV in Metros and BharatStage III in rest of the country
India is expected to align its crash requirements and emissionstandards with European standards in the 2008 / 09timeframe
Presently Bharat Stage III ( Equivalent to Euro III) ismandated 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 expectedto be introduced in the large Indian metros around 2009and Bharat Stage III in the rest of the country
Approach
Harmonization with ECE standards
Homologation and Certificationtesting agencies and centres
Regulation Road Map Targets
Industry challenges to development
Better vehicles: safer and moreenvironment friendly
Government regulations & policy
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State-of-the-art test facilities will supportthe 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 fiveindependent and up gradation of existingtest 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
Up-gradation of VRDE at
AHMEDNAGAR
Up-gradation ofARAI at PUNE
New testing centerfor tractors & off-road
vehicles, accidentdata analysis and
specialised drivingtraining at RAE
BAREILLY
New test &homologation
center nearCHENNAI
New completeproving ground at
INDORE
Hill Area drivingtraining center and
Regional In-Usevehicle
managementcenter at
SILCHAR
Government regulations & policy
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India Advantage andbusiness opportunities
Market Overview
Government regulations & policy
IndiaAdvantage and business opportunities
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Attractiveness of the Indianautomotive industry
Large and growing domestic demand
Demand growth expected to be around10 % CAGR making India one of the fastestgrowing markets
Proven product Developmentcapabilities
Capabilities to develop complete vehiclesand systems
More than 125 Fortune 500 (including largeauto companies) have R&D centres in India
Companies can leverage Indias
acknowledged leadership in the IT industry
Stable economic policies
Continuity in reforms and policies
India targets to emerge as themanufacturing hubfor small cars
Competitivemanufacturing cost
Implementation of VAT, haspositioned India as one of theleading low costmanufacturing sources
High quality standards
12 Indian componentmanufacturers have won theDeming Prize for quality
Most leading componentmanufacturers are QS andISO certified
Export Potential
Increased outsourcing has led toa large potential to exportcomponents and vehiclesto other markets
IndianAuto
Industry
IndiaAdvantage and business opportunities
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Opportunities in the Indianautomotive sector
Participate in domestic growth
opportunities Exports of vehicles
Exports of components
Engineering and DesignServices
Indian
Automotive
Sector
Domestic Opportunities Global outsourcingOpportunities
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
IndiaAdvantage and business opportunities
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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 excitingproducts 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 thelargest exporters of vehicles. Has established India as one of its manufacturingbases 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
IndiaAdvantage and business opportunities
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Key players in the Indian autoindustry - 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
IndiaAdvantage and business opportunities
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Key players in the Indian autoindustry - Two wheelers
The largest 2 wheeler manufacturer in the world
The 2nd largest 2- wheeler manufacturer in India and the largest3 wheeler manufacturer. Has plans for establishing a manufacturingfacility in Indonesia
The third largest 2 wheeler manufacturer in India. Has plansfor 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
IndiaAdvantage and business opportunities
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