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Automobile IndustryAutomobile Industry

in Indiain India

Presented by-Presented by-

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Current ScenarioCurrent Scenario

The first automobile in India rolled in 1897 in Bombay.The first automobile in India rolled in 1897 in Bombay.

Largest two-wheeler manufacturer in the world.Largest two-wheeler manufacturer in the world.

2nd largest tractor manufacturer in the world.2nd largest tractor manufacturer in the world.

5th largest commercial vehicle manufacturer in the world.5th largest commercial vehicle manufacturer in the world.

No. 1 global motorcycle manufacturer is in India.No. 1 global motorcycle manufacturer is in India.

4th largest car market in Asia.4th largest car market in Asia.

Within two-wheelers, motorcycles contribute 80% of the segment size.Within two-wheelers, motorcycles contribute 80% of the segment size.

India is the largest three-wheeler market in the world.India is the largest three-wheeler market in the world.

Tata Motors dominates over 60% of the Indian commercial vehicle marketTata Motors dominates over 60% of the Indian commercial vehicle market..

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AUTOMOBILE

2 WHEELER 3 WHEELERPASSENGER

VEHICLECOMMERCIAL

VEHICLE

MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS

L.C.V. M.C.V. H.C.V.

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SEGMENT WISE MARKETSEGMENT WISE MARKET

SHARESHARE

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KEY PLAYERS IN THE INDIAN AUTO INDUSTRY-KEY PLAYERS IN THE INDIAN AUTO INDUSTRY-

PASSENGER CARS & CVsPASSENGER CARS & CVs

The largest player in the Indian industry. Plans to launch newand excitingproducts in the Indian markets, including the 100,000 car

Suzukis JV in India and the largest passenger car

manufacturer in India

One of the leading players in the Indianpremium cars segment.

Plans to enter the small car segment by re-launching theMatiz

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TWO WHEELERSTWO WHEELERS

The largest 2 wheeler manufacturer in theworld

The 2nd largest 2- wheeler manufacturer in India and thelargest

3 wheeler manufacturer. Has plans for establishing amanufacturingfacility 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 directsubsidiary

The third largest 2 wheeler manufacturer in India. Hasplans

for establishing a manufacturing facility in Indonesia

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AUTOMATIVE CLUSTER INAUTOMATIVE CLUSTER IN

INDIAINDIA

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SWOT Analysis of Indian ExportsSWOT Analysis of Indian Exports

OpportunitiesOpportunitiesOpportunitiesOpportunities

ThreatsThreatsThreatsThreats

Huge Export Markets (Europe ,America ,Africa etc)

for Indian Cars

China , Malaysia , Thailand etc. Other countries also have strategies for Export

Promotion

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EXPORTSEXPORTS

The period from April July 2008 sawThe period from April July 2008 saw

automobile exports registering a growth ofautomobile exports registering a growth of

23.92 percent, but not all segments23.92 percent, but not all segments

registered positive growth.registered positive growth. Passenger Vehicles and Two WheelersPassenger Vehicles and Two Wheelers

segment grew by 42.66 and 27.04 percentsegment grew by 42.66 and 27.04 percent

respectively.respectively.

Three Wheelers exports also declined byThree Wheelers exports also declined by10.22 percent in this period.10.22 percent in this period.

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AUTOMOBILE EXPORT TRENDSAUTOMOBILE EXPORT TRENDS

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Automobile ProductionAutomobile Production

TrendsTrendsCategoryCategory 2006-072006-07 2007-082007-08

Passenger vehiclesPassenger vehicles 13231323 10121012

Utility vehiclesUtility vehicles 222222 175175

Total CVsTotal CVs 520520 388388

Total two wheelersTotal two wheelers 34443444 60296029

Three wheelersThree wheelers 556556 382382

GRAND TOTALGRAND TOTAL 1106511065 80578057

Growth %Growth % 13.5613.56 -2.6-2.6

The automobile sector recorded growth of 13.56% in 2006-07.The automobile sector recorded growth of 13.56% in 2006-07.

Vehicle production grew at 8.78% in April-May 2008 over April-MayVehicle production grew at 8.78% in April-May 2008 over April-May2007.2007.

in thousandin thousand

Source: Annual Report 2007-08,Ministry of Heavy Industries

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Domestic SalesDomestic Sales

The growth of theThe growth of the Passenger Vehicles segmentPassenger Vehicles segment during April July 2008during April July 2008

was 10.97 percent, which is lower than the first quarter growth of 15.08was 10.97 percent, which is lower than the first quarter growth of 15.08

percent. Passenger Cars grew by 8.91 percent, Utility Vehicles by 16.03percent. Passenger Cars grew by 8.91 percent, Utility Vehicles by 16.03

percent and Multi Purpose Vehicles by 24.62 percent in this period.percent and Multi Purpose Vehicles by 24.62 percent in this period.

The overallThe overall Commercial VehiclesCommercial Vehicles also grew by 8.00 percent, which is loweralso grew by 8.00 percent, which is lower

than the first quarter growth of 9.59 percent. Medium & Heavy Commercialthan the first quarter growth of 9.59 percent. Medium & Heavy Commercial

Vehicles grew at 5.45 percent and Light Commercial Vehicles recorded aVehicles grew at 5.45 percent and Light Commercial Vehicles recorded agrowth of 11.13 percent.growth of 11.13 percent.

Three WheelersThree Wheelers sales recorded improvement in April July 2008 over thesales recorded improvement in April July 2008 over the

first quarter growth. Three Wheelers sales grew by 3.28 percent. Whilefirst quarter growth. Three Wheelers sales grew by 3.28 percent. While

Passenger Carriers grew by 18.62 percent during April - July 2008, GoodsPassenger Carriers grew by 18.62 percent during April - July 2008, Goods

Carriers declined by 21.71 percent.Carriers declined by 21.71 percent.

Two WheelersTwo Wheelers also registered higher growth of 9.91 percent during thisalso registered higher growth of 9.91 percent during thisperiod than the first quarter growth of 7.15 percent. Motorcycles andperiod than the first quarter growth of 7.15 percent. Motorcycles and

Scooters grew by 10.95 percent and 7.03 percent respectively. Mopeds grewScooters grew by 10.95 percent and 7.03 percent respectively. Mopeds grew

by 3.38 percent. Electric two wheelers segment also grew by 20.50 percent.by 3.38 percent. Electric two wheelers segment also grew by 20.50 percent.

AUTOMOBILE DOMESTIC SALESAUTOMOBILE DOMESTIC SALES (Number(Number

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AUTOMOBILE DOMESTIC SALESAUTOMOBILE DOMESTIC SALES

TRENDSTRENDS

(Number(Numberoo

Vehicles)Vehicles)

CategoryCategory 2002-032002-03 2003-042003-04 2004-052004-05 2005-062005-06 2006-072006-07 2007-082007-08

PassengePassenger Vehiclesr Vehicles

707,198707,198 902,096902,096 1,061,5721,061,5721,143,0761,143,0761,379,9791,379,9791,547,9851,547,985

CommerciCommercialal

VehiclesVehicles

190,682190,682 260,114260,114 318,430318,430 351,041351,041 467,765467,765 486,817486,817

ThreeThreeWheelersWheelers

231,529231,529 284,078284,078 307,862307,862 359,920359,920 403,910403,910 364,703364,703

TwoTwoWheelersWheelers

4,812,1264,812,1265,364,2495,364,2496,209,7656,209,7657,052,3917,052,3917,872,3347,872,3348,248,5898,248,589

GrandGrand

TotalTotal

5,941,5355,941,5356,810,5376,810,5377,897,6297,897,6298,906,4288,906,42810,123,9810,123,98

88

10,648,0910,648,09

44

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Growth drivers for the Indian automotiveindustry

Contemporaryproducts

Shorter lifecycle

Growth inIncomelevels

Easierfinancing

COST

COMPETITIVENESS

GOVT. POLICIES

NEWPRODUCTLAUNCHES

INDIANAUTOMOTIVEINDUSTRY

INCREASING

CONSUMER

DEMAND

Overall economic

growthLower duties & taxes

ExportCompetitiveness

Reduced costto consumer

India emerging asamanufacturing hub

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Manufacturing Hub inManufacturing Hub in

IndiaIndiaCompanyCompany ParticularsParticulars

HyundaiHyundai Export Base for Small CarsExport Base for Small Cars

SkodaSkoda Hub for exports of cars toHub for exports of cars toneighbouring countries.neighbouring countries.

FordFord Exporting CKDs of Ikon to SouthExporting CKDs of Ikon to SouthAfrica & other countriesAfrica & other countries

Mitsubishi & yamahaMitsubishi & yamaha Hub for 125 cc Motorcycles.Hub for 125 cc Motorcycles.

Maruti suzukiMaruti suzuki Exports cars to EUExports cars to EU

HondaHonda Hub for two-wheelers exportsHub for two-wheelers exports

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Manufacturing Hub forManufacturing Hub for

ComponentsComponentsCOMPANYCOMPANY PARTICULARSPARTICULARS

TOYOTA MOTORSTOYOTA MOTORS Global Hub for TransmissionGlobal Hub for Transmission

Daimler ChryslerDaimler Chrysler

Sourcing more than 70 millionSourcing more than 70 millionEuroEuro

FordFord Full Fledged ComponentFull Fledged ComponentSourcing TeamSourcing Team

FiatFiat Sourcing ComponentsSourcing Components

BACKBACK

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In India there are 100 peopleIn India there are 100 people

per vehicle, while this figureper vehicle, while this figure

is 82 in China. It is expectedis 82 in China. It is expectedthat Indian automobilethat Indian automobile

industry will achieve massindustry will achieve mass

motorization status by 2014.motorization status by 2014.

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Potential investors can capitalize on opportunities both in the domesticPotential investors can capitalize on opportunities both in the domesticand export oriented segments.and export oriented segments.

Investment potential of upto USD 35 - 40 bn in this sector over the nextInvestment potential of upto USD 35 - 40 bn in this sector over the next10 years.10 years.

Investments in the Indian automotive industry can be in various forms:Investments in the Indian automotive industry can be in various forms:100 % subsidiary - 100 % FDI through automatic route allowed in this100 % subsidiary - 100 % FDI through automatic route allowed in thissector.sector.

JVs with local firms.JVs with local firms.

Technology support or sharing agreements.Technology support or sharing agreements.

Indianauto.industr

y

Opportunities in the Indian automotive sector

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GROWTH POTENTIAL OFTHE

INDIAN AUTOMOTIVEINDUSTRY

Potential Vehicle sales in India in 2015 - 06 ( in

2.65

0.64

27.8

0.87

0 10 20 30

2015-16

C ars C Vs T wo wheele rs T hree W heele rs

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 supportthe growth is estimated at around USD

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 capitalize on the

growth in outsourcing to low cost

countries

Exports would lead the growth in the

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

Projected size of Auto Componentsindustry - 2015

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STATE-OF-THE-ART TEST FACILITIESWILL SUPPORT THE GROWTH OF THE

AUTO INDUSTRY The Government of India ispromoting National

Automotive Testing and R&D

Infrastructure Project

(NATRIP) to support the

growth of the auto industry in

India

NATRIP envisages setting upof five independent and upgradation of existing testcentres

Testing centres at

Manesar (Haryana),Chennai (Tamil Nadu),Pune (Maharashtra)

Proving ground at

Indore (MP)

Tractor testing facilityat Rae Bareill (UP)

New testing &homologationcenter at MANESAR

Up-gradation ofVRDE atAHMEDNAGAR

Up-gradation ofARAI at PUNE

New testing centerfor tractors & off-road vehicles,accident dataanalysis andspecialised drivingtraining at RAEBAREILLY

New test &homologationcenter nearCHENNAI

New completeproving ground

at INDORE

Hill Area drivingtraining centerand Regional In-Use vehiclemanagementcenter atSILCHAR

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VISIONVISION

To establish a globally competitive

automotive industry in India

andkeep increasing its contribution

to the economy

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AUTO POLICYAUTO POLICYIn 2002, the Indian government formulated anIn 2002, the Indian government formulated an auto policyauto policy that aimed atthat aimed atpromoting integrated, phased, enduring and self-sustained growth of the Indianpromoting integrated, phased, enduring and self-sustained growth of the Indianautomotive industryautomotive industry

allowsallows automatic approval for foreign equity investment upto 100%automatic approval for foreign equity investment upto 100%in the automotive sector and does not lay down any minimum investment criteria.in the automotive sector and does not lay down any minimum investment criteria.

layslays emphasis on R & D activitiesemphasis on R & D activities carried out by companies in Indiacarried out by companies in India

Weighted tax deduction of upto 150% for in-house research and R & D activitiesWeighted tax deduction of upto 150% for in-house research and R & D activities

Formulation of an appropriate auto fuel policy to ensure availability of adequateFormulation of an appropriate auto fuel policy to ensure availability of adequateamount of appropriate fuel to meet emission normsamount of appropriate fuel to meet emission norms

confirms the governments intention on harmonizing the regulatory standards withconfirms the governments intention on harmonizing the regulatory standards withthe rest of the worldthe rest of the world

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POLICY OBJECTIVESPOLICY OBJECTIVES

(i) Exalt the sector as a lever of industrial growth and employment and to

achieve a high degree of value addition in the country

(ii) Promote a globally competitive automotive industry and emerge as a global

source for auto components

(iii) Establish an international hub for manufacturing small, affordable passenger

cars and a key center for manufacturing Tractors and Two-wheelers in the

world

(iv) Ensure a balanced transition to open trade at a minimal risk to the Indian

economy and local industry

(v) Conduce incessant modernization of the industry and facilitate indigenous

design, research and development

(vi) Steer India's software industry into automotive technology

(vii) Assist development of vehicles propelled by alternate energy sources

(viii) Development of domestic safety and environmental standards at par withinternational standards

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OVERVIEWOVERVIEW By 2010, India is expected to witness over Rs 30,000By 2010, India is expected to witness over Rs 30,000

crore of investment.crore of investment. Maruti UdyogMaruti Udyog has set up the second car plant with ahas set up the second car plant with a

manufacturing capacity of 2.5 lakh units per annum andmanufacturing capacity of 2.5 lakh units per annum andan investment of Rs 6,500 crore.an investment of Rs 6,500 crore.

HyundaiHyundai will bring in more than Rs 3,800 crore to India.will bring in more than Rs 3,800 crore to India.

Tata MotorsTata Motors will be investing Rs 2,000 crore in its smallwill be investing Rs 2,000 crore in its smallcar project.car project.

General MotorsGeneral Motors will be investing Rs 100 crore and Fordwill be investing Rs 100 crore and Fordabout Rs 350 crore.about Rs 350 crore.

Ashok Leyland and Tata Motors have each announcedAshok Leyland and Tata Motors have each announced

over Rs 1,000 crore of investment.over Rs 1,000 crore of investment. Hero HondaHero Honda is about to establish its fourthis about to establish its fourth

manufacturing plant.manufacturing plant. Bajaj AutoBajaj Auto andandTVS MotorsTVS Motors arearemoving to the excise-free zones of Himachal Pradeshmoving to the excise-free zones of Himachal Pradeshand Uttaranchal for putting up new capacity.and Uttaranchal for putting up new capacity.

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Foreign Direct InvestmentForeign Direct Investment

The Indian automotive industry with a turnover of US$ 34 billionThe Indian automotive industry with a turnover of US$ 34 billion

and the auto parts industry with a turnover of US$15 billion offerand the auto parts industry with a turnover of US$15 billion offerexcellent scope for FDI.excellent scope for FDI.

Automatic approval for foreign equity investment upto 100 perAutomatic approval for foreign equity investment upto 100 per

cent of manufacture of automobiles and component is permitted.cent of manufacture of automobiles and component is permitted.

The automobile industry is delicensedThe automobile industry is delicensed

Import of components is freely allowedImport of components is freely allowed

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Automobile Industry in Budget 2008Automobile Industry in Budget 2008

Mr. P. Chidambaram, proposed reduction of excise duties on smallMr. P. Chidambaram, proposed reduction of excise duties on smallcars from 16% to 12%cars from 16% to 12%

the excise duty on the hybrid vehicles was curtailed from 24% tothe excise duty on the hybrid vehicles was curtailed from 24% to14%14%

no such reduction on excise duties in the big car segment or exportsno such reduction on excise duties in the big car segment or exportswas announcedwas announced

the auto components, did not receive much attentionthe auto components, did not receive much attention

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Auto Industry fell after hike inAuto Industry fell after hike in

fuel and interest ratesfuel and interest rates

The First Quarter (April to June) of 2008, the VehicleThe First Quarter (April to June) of 2008, the Vehicleproduction grew by 9.45% but domestic sales grew at aproduction grew by 9.45% but domestic sales grew at aslower pace of 8.19%slower pace of 8.19%

In June 2008 Passenger Vehicles grew by 8.06% whileIn June 2008 Passenger Vehicles grew by 8.06% while

Commercial Vehicles grew by 13.53% when compared toCommercial Vehicles grew by 13.53% when compared tosame period in 2007same period in 2007 Three Wheeler sales declined by 4.35% in June 2008 butThree Wheeler sales declined by 4.35% in June 2008 but

Two wheeler sales increased by 6.45%Two wheeler sales increased by 6.45% Hike in the fuel prices and hike in the interest rates of autoHike in the fuel prices and hike in the interest rates of auto

loans heavily affected the auto industry for the slowerloans heavily affected the auto industry for the slower

pace of growthpace of growth

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AUTO SALES

CategoryCategory June 2008June 2008 June 2007June 2007 % Change% Change

Passenger VehiclesPassenger Vehicles 129,536129,536 119,867119,867 8.068.06

Commercial VehiclesCommercial Vehicles 40,32440,324 35,51835,518 13.5313.53

Three WheelerThree Wheeler 29,80429,804 31,16131,161 -4.35-4.35

Two WheelerTwo Wheeler 601,941601,941 565,433565,433 6.456.45

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AutoComponents IndustryAutoComponents Industry Indian auto component industry has seen major growth with theIndian auto component industry has seen major growth with the

arrival of world vehicle manufacturers from Japan, Korea, US andarrival of world vehicle manufacturers from Japan, Korea, US and

Europe. Today, India is emerging as one of the key autoEurope. Today, India is emerging as one of the key autocomponents center in Asiacomponents center in Asia

Indian auto component industry is wide (over 400 firms in theIndian auto component industry is wide (over 400 firms in the

organized sector producing practically all parts and more thanorganized sector producing practically all parts and more than

10,000 firms in small unorganized sector, in tierized format) and10,000 firms in small unorganized sector, in tierized format) and

has been one of the fastest growing segments of auto industry.has been one of the fastest growing segments of auto industry.

During the year 2006-07, the Auto Component Industry continuedDuring the year 2006-07, the Auto Component Industry continued

its high growth path and emerged as one of the fastest growingits high growth path and emerged as one of the fastest growing

sector in Indian Engineering Industry by clocking 21% growth insector in Indian Engineering Industry by clocking 21% growth in

output during the year.output during the year.

The industry crossed a total turnover of over US $ 15 billion (Rs.The industry crossed a total turnover of over US $ 15 billion (Rs.

64,500 crore), with exports of US $ 2.9 billion (Rs. 12,643 crore)64,500 crore), with exports of US $ 2.9 billion (Rs. 12,643 crore)during the year.during the year.

C dA t C t I d t

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AutoComponents IndustryAutoComponents Industry

(Cont.)(Cont.) It supports industries like automobiles, machine tools, steel,It supports industries like automobiles, machine tools, steel,

aluminum, rubber, plastics, electrical, electronics, forgings andaluminum, rubber, plastics, electrical, electronics, forgings and

machining.India has also emerged as an outsourcing hub for automachining.India has also emerged as an outsourcing hub for auto

parts for international companies such as Ford, General Motors,parts for international companies such as Ford, General Motors,

Daimler Chrysler, Fiat, Volkswagon, and Toyota.Daimler Chrysler, Fiat, Volkswagon, and Toyota.

As Global OEMs/Tier 1 companies have identified India as a LeadingAs Global OEMs/Tier 1 companies have identified India as a LeadingCompetitive country for sourcing auto components for their globalCompetitive country for sourcing auto components for their global

production, Indian auto component industrys export scenario isproduction, Indian auto component industrys export scenario is

changing very fast; auto component industrys export growth waschanging very fast; auto component industrys export growth was

15% in 2006-0715% in 2006-07

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The Industry auto components industry is successfully managing high growth and covers

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y y y g g g g

a comprehensive production range

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EXPORTS ARE RISING - INDIA HAS THEPOTENTIAL

TO BECOME THE GLOBAL OUTSOURCING HUB

Indian vehicle exports have grown at a scorchingrate of over 40 % over the last fewyears, 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

Export of auto compone nt

(USD million)

456625 578

760

1,800

1020

1400

FY00 FY01 FY02 FY03 FY04 FY05 FY06

25%

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Automotive Mission Plan 2016Automotive Mission Plan 2016

On 29.01.07, the Prime Ministerreleased

Automobile Plan 2006 -2016 togive a road map to Indian

Automobile Industry

Increase turnoverto

$145 billion by2016from $ 35 billion

at present

Increase exportrevenue

To $ 35 billion by2016 from$ 4.1 billion at

present

Provideemployment to

additional 25million peopleby 2016

By 2016, the Automotive sector is expected to contribute10% of the countrys GDP and 30~35% of the Industry

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