Chapter-2 OVER VIEW OF INDIAN AUTOMOBILE...

53

Chapter-2

OVER VIEW OF INDIAN AUTOMOBILE SECTOR

2.1 INTRODUCTION

It is a well accepted fact that the automotive industry is a volume driven industry and

a certain critical mass is a pre-requisite for attracting the much needed investment in

Research and Development, New Product Design & Development, and in R&D

investment is also needed for innovations which is the life line for achieving and

retaining the competitiveness in this industry. This competitiveness in turn depends

on the capacity and the speed of the industry to innovate and upgrade. No nation on

its own can make its industries competitive but it is the companies which make the

industry competitive. The most important indices of competitiveness are the

productivity both of labor and capital.

The concept of attaining competitiveness on the basis of cheap and abundant labor,

favorable exchange rates, low interest rates and concessional duty structure is

becoming outdated and not sustainable. In the light of above, it is felt that a greater

emphasis is required on the development of the factors which can ensure

competitiveness on a long term basis.

The automotive sector with its deep backward (metals- steel, aluminum, copper etc.

plastics, paint, glass, electronics, capital equipments, trucking warehousing and

logistics) and forward (dealership retails , credit and financing, logistics, advertising,

repair and maintenance, petroleum products, gas stations, insurance, service parts)

linkages has been recognized and identified at different forums ( Development

Council of Automobile and Allied Industries, Planning Commission, National

Manufacturing Competitiveness Council and Investment Commission) as a sector

with a very high potential to increase the share of manufacturing in GDP , exports and

employment. The sector is also seen as a multiplier of industrial growth. It helps in

attaining two critical goals of the Government, that of increasing manufacturing

output and of providing employment. Although indirectly but it also facilitates the

54

third objective of increasing agricultural productivity through farm mechanization

and the needs of agricultural produce transportation.

The country with its rapidly growing middle class (450 million in 2007, NCAER

Report), market oriented stable economy, availability of trained manpower at

competitive cost, fairly well developed credit and financing facilities and local

availability of almost all the raw materials at a competitive cost has offered itself as

one of the favorite destination for investment to the auto makers. These advantages

need to be exploited in a manner to attain the twin objective of ensuring availability

of best quality product at lowest cost to the consumers on the one hand and

developing and assimilating the latest technology in the industry on the other hand.

It is also important that a general improvement in availability of trained manpower

and good infrastructure is required for the sustainable growth of the industry. But

these generalized efforts in development of the factors of production rarely produce

competitive advantage. Only an advanced, specialized and industry specific initiatives

can lead to competitive advantage. Keeping in view the above factors, the

Government of India has launched a unique initiative of NATRIP to provide a

specialized facility for Testing, Certification and Homologation to the industry.

A similar initiative is required for creating a specialized institution in automotive

sector for education, training and development, market analysis and formulation and

dissemination of courses in automotive sector through ITIs and ATIs .

It has been noticed that the Auto Industry has grown in clusters of inter-connected

companies which are linked by commonalities and complementarities. The major

clusters are in and around Manesar in North, Pune in West, Chennai in South,

Jamshedpur-Kolkata in East and Indore in Central India.

The Indian Government is envisaged in the Eleventh Five Year Plan period to create a

National Level Specialized Education and Training Institute for Automotive Sector

and to enhance the transportation, communication and export infrastructure facilities

through concerned Ministries in and around these clusters. The Government will

make attempts to eliminate all the barriers to local competition and organize the

55

relevant Government Department and Educational and Research Institution in and

around the clusters.

2.2 The Present Status of Automotive Industry-

The Indian Automotive Industry comprising of the automobile and the auto

component sectors has recorded considerable growth following the de-licensing and

opening up of the sector to FDI in 1993. The unbundling of this industry from

restrictive environment has, on the one hand, helped in restructuring, absorbing new

technologies align it to the global developments and realize its potential with

significant increase in industry’s contribution to overall industrial growth in the

country. The investment in the industry of nearly Rs. 50,000 Crore in 2004-05 is

slated to go up to Rs. 85,000 Crore by 2007-08.

Automotive Industry, globally, as well in India, is one of the key sectors of the

economy. Due to its deep forward and backward linkages with several key segments

of the economy, automotive industry has a strong multiplier effect and acts as one of

the drivers of economic growth.

The well-developed Indian automotive industry produces a wide variety of vehicles:

passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles

such as jeeps, scooters, motor-cycles, mopeds, three wheelers, tractors and other

agricultural equipments etc. The sector has tremendous potential of providing

employment which will increase the present figure of employment in manufacturing

sector which is quite low at 12% as compared to the countries like Malaysia (50%);

Korea (62%) and China (31%).

2.2.1 Installed capacity -

The automobile industry especially over a period of time and particularly after

liberalization, has installed a robust capacity. The installed capacity in different

segments of automobile industry is as under:

56

Table 2.1 Installed Capacities in Different Segments (in nos.)

S. No. Segment Installed Capacity

1 . Four Wheelers 1,590,000

2 Two & Three Wheelers 7,950,000

Grand Total 9,540,000

Source- SIAM

2.2.2 Production Trend -

The production of all categories of vehicles has grown at a rate of 16% per annum

over the last five years. The last 5 years achievements are given below:

Table 2.2 Productions of all categories of vehicles

Category 2001-02 2002-03 2003-04 2004-05 2005-06

Passenger Car 564052 608851 842437 960505 1045881

Multi Utility Vehicles 105667 114479 146103 249149 263032

Commercial Vehicles 162508 203697 275224 350033 391078

Two Wheelers 4271327 5076221 5624950 6526547 7600801

Three Wheelers 212748 276719 340729 374414 434424

Total 5316302 6279967 7229443 8460648 9735216

Percentage (%) 11.70% 18.60% 15.12% 16.80% 15.06%

Source: SIAM

2.2.3 Export of Vehicles-

Automotive industry of India is now finding increasing recognition worldwide. While

a beginning has been made in exports of vehicles, the potential in this area still

remains to be fully tapped. Significantly, during the last two years the export in this

sector has grown specifically in export of cars and two / three wheelers. The table

below indicates the export performance during last six years.

57

Table 2.3 Export of Different types of automobiles from India

Category 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Passenger Car 22990 50088 70828 126249 160677 170193

Multi Utility Vehicles 4122 3077 1177 3067 5736 5579

Commercial Vehicles 13770 11870 12255 17227 29949 40581

Two Wheelers 111138 104183 179682 264669 366724 513256

Three Wheelers 16263 15462 43366 68138 66801 76885

Total 168283 184680 307308 479350 629887 806494

Growth Percentage (%) 9.74 66.4 55.98 31.4 28.03

Source: SIAM

The automobile exports crossed US $ 1 billion mark in 2003-04 and reached US $

2.28 billion in 2005-06.

2.2.4 Manufacturers of automobiles in India-

Automobile manufacturing industry is highly capital intensive and need very

expensive technology, however the growth in Indian automobile market has not only

encouraged the Indian organizations but also attracted many automobile

manufacturers to set up their manufacturing facilities here.

To maximize the efficient use of the resources most of these manufacturers are using

these facilities to manufacture multiple type of the automobiles.

A glimpse of different types of vehicles being manufactured by different

manufacturers in India can be had in the following table---

58

Table 2.4 Manufacturers of automobiles in India

Passengers Vehicles (PVS) Maruti Udyog

Hyundai Motors India Ltd.

Tata Motors

Honda Siel cars India Ltd.

Ford India Pvt. Ltd

Mahindra and Mahindra Ltd.

Mercedes

Skoda

Volkswagen

Fiat

BMW

Nisan

General Motors

Hindustan Motors

Utility Vehicles Maruti Udyog Ltd.

Mahindra and Mahindra Ltd.

Toyota Kirloskar MotorPvt Ltd.

Tata Motors Ltd

General Motors India Pvt Ltd.

Hyundai Motor India Ltd.

Mahindra & Mahindra Ltd

Multi-Purpose Vehicles Maruti Udyog Ltd.

Mahindra & Mahindra Ltd

Medium and Heavy

Commercial Vehicles

Tata Motors

Ashok Leyland

Eicher Motors

Swaraj Mazda

59

Passenger Carriers Tata Motors

Mahindra and Mahindra

Swaraj Mazda

Eicher Motors

Volvo

Mercedes

Goods Carriers Tata Motors

Mahindra and Mahindra

Swaraj Mazda

Eicher Motors

Volvo

Mercedes

Source- computed through various journals, magazines etc.

2.3 Car manufacturing Industry-

Since this study is for the small car, the detail of the car industry in India is of

significance importance for the study. Some of the relevant information available on

various publications are given below-

2.3.1 Current Status-

The Indian automobile industry is the tenth largest in the world with an annual

production of approximately 2 million units. Indian auto industry, promises to

become the major automotive industry in the upcoming years and the industry experts

are hopeful that it will touch 10 million units mark.Indian automobile industry is

involved in design, development, manufacture, marketing, and sale of motor vehicles.

There are a number of global automotive giants that are upbeat about the expansion

plans and collaboration with domestic companies to produce automobiles in India.

The major car manufacturers in India are Maruti Udyog, Hyundai Motors India Ltd.,

General Motors India Pvt. Ltd., Honda Cars India Ltd., Toyota Kirloskar Motor Ltd.,

Hindustan Motors etc.

60

The two-wheeler manufacturers in India are Honda Motorcycle & Scooter India (Pvt.)

Ltd., TVS, Hero Honda, Yamaha, Bajaj, Mahindra and Mahindra, Force motor India

etc.

The heavy motors including buses, trucks, auto rickshaws and multi-utility vehicles

are manufactured by Tata-motors, Eicher Motors, Bajaj, Mahindra and Mahindra,

Volvo, Mercedes etc.

The Indian automotive industry is the 2nd fastest growing in the world. About 8

million vehicles are produced annually in this country toady. During 2005-2006,

India has emerged as the 3 rd largest market in the Asia Pacific Region.

With various car manufacturing companies setting up their units in different parts of

the country, the production of the cars will increase at a very fast rate. The car

statistics indicate that India will soon become one of the top 10 car manufacturing

countries , leaving behind the U.K. Car statistics also show that by the end of the

fiscal year 2006-2007, the car production capacity in India will exceed the mark of 2

million. Thus, the production of cars will increase by 70% from the present capacity

of 1.2 million.

2.3.2 Total Sale of cars -

A graphical representation of the total sale trend of passenger cars (including the

domestic sale and exports) is made below:

Fig: 2.1 Trend of Passenger Car Sale, Source- SIAM

2.3.2.1 Domestic Sale of Cars

The domestic sales of passenger cars have increased significantly over the years. A

graphical representation of the domestic sale of cars will give you an insight about the

present market situation prevailing in the country

Fig. 2.2 Domestic sale of car in India,

In the recent years, India has emerged as one of the major bases for manufacturing

small passenger cars. At In the recent years, India

bases for manufacturing small passenger cars. At present the Indian automotive

industry boasts of being the 3 rd largest manufacturer of small cars . According to the

car statistics almost 70 % of the cars sold in this coun

small cars. A number of car manufacturers like: Maruti Udyog,

Hyundai, Honda, Ford, Hindustan Motors

model of cars.. It is expected that the various automobile manufacturers will be

investing about $ 5 billion in India, during t

0

200000

400000

600000

800000

1000000

1200000

1400000

675000

2.3.2.1 Domestic Sale of Cars -



present market situation prevailing in the country:

.

Fig. 2.2 Domestic sale of car in India, Source- SIAM


small passenger cars. At In the recent years, India has emerged as one of the major



car statistics almost 70 % of the cars sold in this country come under the segment of

small cars. A number of car manufacturers like: Maruti Udyog, Tata Motors

Hindustan Motors, Fiat, General Motors etc offer various new


investing about $ 5 billion in India, during the period2005-2010.

700000

9000001020000

1150000

1375000

Domestic Sale of Cars

Unit Sold

61




has emerged as one of the major



try come under the segment of

Tata Motors,

etc offer various new


Unit Sold

62

2.3.2.2 Exports of Cars -

As per the reports, export of passenger cars from India has also grown considerably

over the last decade. A graphical representation of car export trend will help you to

make an in-depth analysis of the present status of the Indian automotive industry:

www.automobileindia.com

Fig 2.3 Export of cars from India, Source- SIAM

With new strategies being implemented and more investments being made in Indian

automotive industry the production as well as the domestic sale and exports will

increase substantially.

2.4 Multi Utility Vehicles in India

Automobile companies like Maruti, Mahindra & Mahindra and Tata Motors have

come up with some of the highest performance delivering multi utility vehicles or

MUVs. These MUVs are designed specially keeping in view the Indian conditions

and are laden with a number of advanced technical specifications. Multi utility

vehicle statistics suggest that the production of these vehicles will increase at a fast

pace in the forthcoming years. Production trend of multi utility vehicles in India from

50200

74750

125250

165000175000

200000

0

50000

100000

150000

200000

250000

Car Export Trend

Unit Sold

63

2001 to 2007: Due to their fuel efficiency and multi usage potentialities, the MUVs

have become much popular in India. Over the years, the demand of multi utility

vehicles has also increased. The MUVs produced nowadays are even having excellent

features. The MUVs come with a cluster of numerous comfort features that ensure

smooth driving experience to the users. Although the other segments of car have

recorded production growth at a higher rate but the manufacture of MUVs have

grown slowly. In the last decade, the domestic sale of these vehicles has seen many

ups and downs. Multi utility vehicle statistics indicate that the domestic sale of these

vehicles will however grow in the following years.

2.4.1 Domestic sales trend of multi utility vehicles

Domestic sales trend of multi utility vehicles in India from 2001 to 2007 has been

depicted with the help of following bar diagram,

Fig 2.4 Domestic sale trend of MUV’s in India, Source- SIAM

From the perusal of above data it quite evident that domestic sale of multi utilility

vehicle was 60755 in 2001-2002, which incresed to 83091 vehicles in 2006-2007 ,

thus it has registered a growth of about 40 percent during this period.

6075552987

5965565033 66385

83091

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Domestic Sales Trend of MUVs

Unit Exported

64

2.4.2 Export Trend of MUVs from India

Export of multi-utility vehicles has also increased during the corresponding period.

India exported 815 MUVs in the year 2001-2002, which increased to 1290 vehicles in

the year 2006-2007, thus registered an impressive growth of about 60 percent during

this period.

Figures relating to export trend of MUVs have been presented through the help of

following bar diagram as drawn in Fig. 2.5 --

Fig 2.5 Export Trend of MUV’s from India Source- SIAM

2.5 Growth in automobile Production

Details of production of different types of automobiles manufactured by the Indian

manufacturing units, is tabulated below are indicative of the growth registered by

each sagment of automobiles (the data do not inclueds two wheelers)

815

515

922

1227

1002

1290

0

200

400

600

800

1000

1200

1400

Export Trend of MUVs

Unit Exported

65

Table. 2.5 The production of vehicles by various manufactures in the year

2004-05 & 2005-06

Passengers Vehicles (PVS) From

April-

November

04-05

From

April-

November

05-06

Total

Market

Share

(in %)

The Net

Change

between

the

period

(in %)

Total

number

of

exports

in April

05-06

Maruti Udyog 2,69360 2,91,182 52.2 8.1 23,043

Hyundai Motors India Ltd. 89,075 1,07, 066 19.2 20.2 68,374

Tata Motors 95,402 24,348 16.6 -2.7 12,105

Honda Cars India Ltd. 23,186 24,348 4.4 5.1 31

Ford India Pvt. Ltd 15,026 10,512 1.9 -30% 9,928

Utility Vehicles

Mahindra and Mahindra Ltd. 49,897 51,540 42.7 3.3 1,878

Toyota Kirloskar MotorPvt Ltd. 24,404 24,983 20.7 2.4 0

Tata Motors Ltd 19,967 21,610 17.9 8.2 905

General Motors India Pvt Ltd. 7,008 12,027 10 71.6 0

Maruti Udyog Ltd . 2682 2472 2 -7.8 54

Hyundai Motor India Ltd. 255 1,042 0.9 308.2 0

Multi-Purpose Vehicles

Maruti Udyog Ltd. 42,388 43,858 100 3.5 731

Mahindra & Mahindra Ltd 13 0 0 0 0

66

Medium and Heavy

Commercial Vehicles

Tata Motors 79,614 73,538 61.1 -7.6 4,807

Ashok Leyland 27,577 33,406 27.7 21.1 2825

Eicher Motors 8,043 8,700 7.2 8.2 318

Swaraj Mazda 3,573 4,080 3.4 14.2 115

Light Commercial Vehicles

and passenger careers

Tata Motors 5,835 6,811 46.8 16.7 1,096

Mahindra and Mahindra 2,305 1,960 13.5 -15 115

Swaraj Mazda 1,178 1,315 9 11.6 12

Force motors Ltd. 2,059 2,877 19.8 39.7 59

Goods Carriers

Tata Motors 30,955 44,380 58.9 43.4 12,461

Mahindra and Mahindra 23,563 23,731 31.5 0.7 1,600

Swaraj Mazda 2,671 2,299 3 -13.9 204

Eicher Motors 3,019 2,954 3.9 -2.1 451

Source- SIAM

2.6 Hatchback in India -

Small cars falls in the category of Hatchbacks and therefore information about the

different Hatchbacks available on Indian roads, the price, seating capacity ,fuel and

capacity of engine, the running fuel efficiency are of interest. Currently to meet the

increased demand and preferences all manufacturers have developed different models

of Hatchback having multiple variants. The table below gives the details of various

Hatchbacks available in Indian market. Many of these models are having many

variants with different facilities to meet the preferences of customers.

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Table 2.6 Models of Hatchback on Road in India – 2011

Models Ex. Showroom Price Description

Tata Motors Nano Rs.1.51 to 2.10 lakh Hatchback, 4 Seater

Fuel Type: Petrol

Mileage: 18.3(Tested)

Engine: 624 CC

Maruti Suzuki Alto Rs. 2.49 to 3.49 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 13.85

Engine: 796 CC

Hyundai New EON Rs.2.80 to 3.84 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 21.1 (Claimed)

Engine: 814 CC

Chevrolet Spark Rs. 3.33 to 4.18 lakh Hatchback, 5 Seater

Fuel Type: Petrol_Lpg

Mileage: 16.5

Engine: 995 CC

Maruti Suzuki Estilo Rs. 3.42 to 4.36 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 13.55

Engine: 998 CC

Tata Motors Indica eV2 Rs. 3.42 to 5.04 lakh Hatchback, Seater

Mileage: 25

Engine: 1396 CC

Maruti Suzuki Wagon R Rs. 3.52 to 4.43 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 998 CC

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Hyundai i10 Rs. 3.72 to 6.24 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: NA

Engine: 1086 CC

Maruti Suzuki A Star Rs. 3.80 to 4.63 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 998 CC

Ford Figo Rs. 3.91 to 6.08 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1196 CC

Chevrolet Beat Rs. 3.94 to 6.00 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1199 CC

Honda Brio

Rs. 4.17 to 5.40 lakh

Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 18.4 ( Claimed)

Engine: 1198 CC

Maruti Suzuki Ritz Rs. 4.27 to 6.36 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 17.7

Engine: 1197 CC

Nissan Micra Rs. 4.33 to 6.58 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1198 CC

Maruti Suzuki New Swift Rs. 4.53 to 6.85 lakh Hatchback, 5 Seater

Fuel Type: Diesel

Mileage: 22.9 (Claimed)

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Engine: 1248 CC

Toyota Liva Rs. 4.68 to 6.44 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1197 CC

Volkswagen Polo Rs. 4.68 to 7.38 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1198 CC

Fiat Grande Punto Rs. 4.91 to 7.50 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 15.2(Claimed)

Engine: 1172 CC

Skoda Fabia Rs. 4.98 to 7.45 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 16.4(Claimed)

Engine: 1198 CC

Honda Jazz Rs. 6.03 to 6.53 lakh Hatchback, 5 Seater

Fuel Type: Petrol


Engine: 1198 CC

Skoda Fabia Scout Rs. 6.84 to 8.15 lakh Hatchback, 5 Seater

Fuel Type: Petrol

Mileage: 16.5

Engine: 1198 CC

Source- Computed from information available in Autocar and other auto related

magazines.

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2.7 Small Car Models in India Market –

Since the current study is related to the small cars in particular, information about the

small cars in India was gathered. The following table gives the details of the ever

growing list of the popular Small car modules available in Indian market as on Sept.

2011.

Table 2.7 Details of the Popular Small Car Models in India- (Sept.2011)

Sr. No Manufacturer Model On Road

Showroom Price

( Rs.In Laces)

Fuel Engine

Size in

CC

Length

( In

mm)

Mumbai Delhi

1. Chevrolet Beat (1.2 PS) 4.26 3.93 Petrol 1199 3640

Beat (1.0 LT

Option)

6.42 5.94 Diesel 936 3640

Spark (1.0) 3.86 3.54 Petrol 995 3495

U-VA (1.2) 4.90 4.46 Petrol 1150 3880

2. FIAT Grande Punto

(1.2 Fire Active)

5.08 4.80 Petrol 1172 3987

Grande Punto

(1.4 Fire

Emotion)

6.37 6.00 Petrol 1368 3987

Grande Punto

(1.3 Multi Jet

Emotion)

6.94 6.54 Diesel 1248 3987

3. FORD Figo (1.2 LXI

Duratec)

4.10 4.04 Petrol 1196 3795

Figo (1.4 LXI ) 5.46 5.02 Diesel 1399 3795

4. HONDA Jazz 6.50 6.20 Petrol 1198 3900

5. HYUNDAI i10 (1.1 D-Lite) 4.15 3.91 Petrol 1086 3565

i10 1.2 Asta (O) 6.98 6.50 Petrol 1197 3565

71

A/T

i20 (1.2 Era) 5.33 5.06 Petrol 1197 3940

i20 (1.4 CRDi

Magna)

7.21 7.02 Diesel 1396 3940

Santro Xing GL

(Non AC)

3.25 3.11 Petrol 1086 3565

6. Mahindra

Reva Electric

Reva (standard) 3.95 3.56 Electric

al

AC Elc. 2638

7. Maruti

Udyog Ltd

Alto (LX) 3.14 2.93 Petrol 796 3495-

3620

Alto K10 (LXi) 3.60 3.36 Petrol 998 3495-

3620

A-Star (ZXI) 4.94 4.66 Petrol 998 3500

Omni (MPI – 8

Seater)

2.79 2.56 Petrol 796 3370

Estilo (LX) 3.80 3.61 Petrol 998 3600

WagonR (VXi) 4.55 4.28 Petrol 998 3595

Ritz (LDi) 5.58 5.40 Petrol 1248 3715

Ritz (VXi) 5.07 4.82 Petrol 1197 3715

Swift (LXi) 5.35 4.65 Petrol 1197 3850

Swift (LDi) 6.34 5.66 Diesel 1248 3850

EECO

(Std 5 – Seater)

3.29 3.14 Petrol 1196 3675

EECO (AC 5 –

Seater CNG)

4.51 4.10 CNG 1196 3675

8. Nissan MICRA (XE) 4.88 4.53 Petrol 1198 3780

MICRA (XV)

Diesel

6.75 6.27 Diesel 1461 3780

9. Skoda Fabia (1.2 MPi 5.45 5.13 Petrol 1198 4000

72

Active Plus)

Fabia (1.6 MPi

Eligance)

7.22 7.00 Petrol 1598 4000

Fabia (1.2 TDi

Active Plus)

6.67 6.30 Diesel 1199 4000

10. Tata Motors Nano (Std) 1.73 1.56 Petrol 624 3099

Indica

(eV2 Xeta GL)

3.49 3.43 Petrol 1193 3690

Indica

(eV2 L)

4.64 4.53 Diesel 1396 3690

Vista

(Safire 65 GLS)

4.47 4.30 Petrol 1172 3795

Vista (Safire 90

GLX)

5.91 5.65 Petrol 1368 3795

Vista (Quadrajet

ZX)

7.00 6.82 Diesel 1248 3795

Indigo eCS (LS

DICOR)

6.08 5.92 Diesel 1396 3988

Indigo eCS

(GLS)

5.12 5.05 Petrol 1193 3988

11. TOYOTA Etios Liva (J) 4.94 4.42 Petrol 1197 3775

Etios Liva (GD) 6.49 6.18 Diesel 1364 3775

12. Volkswagen Polo (1.2

Trendline

Petrol)

5.26 5.08 Petrol 1198 3970

Polo (1.6

Highline Petrol)

7.35 7.36 Petrol 1598 3970

Polo (1.2

Trendline

Diesel)

8.08 7.97 Diesel 1199 3970

Source – AUTOCAR India (October 2011)

73

2.8 New Car Models for Consumers in Indian, in 2012 -

It is interesting to note that though Small Car market is growing it is having

competition from the other segments of personal vehicles as well, both on price as

well as technical competency, as the automobile companies in India are in the process

of introducing the following new models in the near future-

Table 2.8 New cars for India consumers in 2012 – Updated

Sr.

No

Manufacturer &

Model

Engine

Size

Power/Torque Kerb

Weight

Dimensions

(L/W/H)

Price

(In

Rs.)

Expe

cted

time

1 Audi S6/S7/S8 4-litre

twin-

turbo

V8.

414bhp/

56.13kgm

1895kg

4931/1874/NA mm 85

lakh

Mid

2012

2 Ashok Leyland

Stile

1.5-litre

diesel

105bhp/24.4kg

m

1269kg

4400/1695/1860

mm

7.5-9.5

lakh

Early

2013

3 Chevrolet Enjoy

(MPV)

1.4-litre

petrol

102bhp/13.35k

gm

1205kg 4305/1680/1750

mm

6

lakh

July

2012

4 Chevrolet Sail

Saloon

1.4-litre

petrol

102bhp/13.35k

gm

1070kg 4249/1690/1505

mm

6-7.5

lakh

Sept

2012

5 Chevrolet Sail

Hatchback

1.2-litre

petrol

79bhp/10.91kg

m

1070kg 3947/1690/1503

mm

4-6

lakh

July

2012

6 Force MPV 2.2-litre

diesel

139bhp/32.7kg

m

NA 4763/1338/2253

mm

10-15

lakh

Late

2012

7 Fiat Punto Evo 1.2-litre

petrol,

1.4-litre

petrol,

1.3-litre

67bhp/9.76kgm

,89bhp/

11.67kgm,

75bhp/20kgm,

90bhp/21.3kgm

1090-

1145kg

NA/1687/1495mm NA NA

74

diesel,

1.3-litre

diesel

8 Ford Eco Sport 1.2-litre

petrol,

1.5-litre

diesel

NA,

88.7bhp/20.8kg

m

NA NA 6-7.5

lakh

Early

2012

9 Ford Fiesta

Hatchback

1.5-litre

petrol,

1.5-litre

diesel

107bhp/14.2kg

m,

88.7bhp/20.8kg

m

1153kg 3950/1722/1475

mm

6.5

lakh

Mid

2012

10 HM

Ambassador

1.5-litre

diesel

NA NA NA 4.8

lakh

Early

2012

11 New Honda

CR-V

2.4-litre

petrol

NA NA NA 20

lakh

Late

2012

12 Mahindra-

Ssangyong

Korando

2-litre

diesel

173bhp/36.7kg

m

1672-

1692kg

4410/1830/1675

mm

15-17

lakh

Late

2012

13 Mahindra Reva

NXR

Electric

motor

NA 900kg/85

0kg

(NXR)

NA 3.5-4.5

lakh

Mid

2012

14 Mahindraverito

(sub-4 metres)

1.5-litre

diesel

65bhp/16.3kgm NA NA 4.8

lakh

End

2011

15 Mahindra Mini-

Xylo (sub-4

metres)

1.5-litre

diesel

NA NA NA 4-5

lakh

Early

2012

16 Maruti Alto 800 0.8-litre

petrol

NA NA NA 1.9-2.5

lakh

Early

2012

17 Mercedes-Benz

B-Class

1.8-litre

diesel, 1

135bhp/30.5kg

m, 156bhp/25.5

1395-

1475kg

4359/1786/1557

mm

18-22

lakh

Late

2012

75

.6-litre

turbo-

petrol

kgm

18 Nissan Evalia

(NV200)

1.5-litre

diesel

105bhp/24.4kg

m

1269kg 4400/1695/1860

mm

7.5-12

lakh

Early

2012

19 Renault Scala 1.5-litre

petrol,

1.5-litre

diesel

97bhp/13.6kgm

,

85bhp/20.4kgm

NA NA 7-9

lakh

Septe

mber

2012

20 New Porsche

911

3.4-litre

petrol,

3.8-litre

petrol

345bhp/39.8kg

m,394bhp/44.9

kgm

1455-

1470kg

4491/1808/1295

mm

From

Rs 90

lakh

Septe

mber

2012

21 Tata Manza CS

1.2-litre

petrol,

1.3-litre

diesel

65bhp/9.8kgm,

74bhp/19.3kgm

NA NA 5 lakh Late-

2012

22 Tata Safari

Storme

2.2-litre

diesel

140bhp/32.6kg

m

NA NA 11

lakh

Early

2012

23 New

Volkswagen

Beetle

1.4-litre

turbo-

petrol,

2-litre

diesel

158bhp/24.5kg

m,

138bhp/32.6kg

m

1360kg 4278/2021/2048 25

lakh

Late

2012

Source – AUTOCAR India (October 2011)

2.9 Top Ten Models of Personal Vehicles, in Indian market-

The fast changing Socio- economic pattern of Indian consumer having multiple

interest and complexion/variety in their choice of product also reflects in the domestic

Personal Vehicle purchased by them. Data relating to the sale of top 10 models of

76

personal vehicles for August 2011 have been presented through the following figures

to make them understandable at a glance,

Source- Autocar India

Fig: 2.6 Top Ten Models of PV sold in Aug. 2011

The above information established the following facts-

• In the PV segment it is the Maruti make which is the most preferred by Indian

consumer. 68 percent of total sale of such vehicles has been registered by the

models and makes manufactured by Maruti-Suzuki India Ltd.

• Small cars accounts for 85% preferred choice of the Indian PV consumers.

2.10. Auto component Industry: current status -

Indian Automobile industry is flourishing and expanding worldwide.The spine of the

automobile manufacturing industry is its suppliers of auto components and

accessories which is also an exclusive industrial segment.

The later globalization period enhanced the trade in all sectors which includes

automobile and auto components in top trading commodities. The new auto policy

helped to promote the auto sector worldwide. The cheap labor and resources in India

has captivated the attention of developed countries from long years back. Only on the

globalization the trade benefits came into clear picture and also India realized the

potential of the world market.

6554

6955

7005

7053

7206

7511

7856

9185

10913

23170

0 5000 10000 15000 20000 25000

Mahindra Bolero

Maruti Ritz

Tata Indica

Maruti Swift Dzire

Maruti Wagon R

Units Sold

77

2.10.1 Classification and Structure of Auto Component Industry

Auto component industry can be segmented on the basis of the production of

component types as below

• Engine Parts

• Gear

• Drive Transmission and Steering Parts

• Suspension and Brake Parts

• Electrical Parts

• Equipments

• Other Parts

In India the auto component industry is structured in three basic categories.

• Indian companies without any collaboration or having very minimal collaboration

with any foreign companies for e.g. Sundram Brake Lining, Sundram Fasteners.

• Indian companies with foreign collaboration, such as Indian Nippon Electricals,

Hinoday etc.

• MNCs completely owned subsidiaries or the units in which they have major control.

For e.g. Delphi, Visteon, Denso, MICO etc.

2.10.2 Evolution of Auto Components industry

The Auto component Industry is directly dependent on Auto manufacturing industry.

This industry was of very small size in the period of 1970s. The growth initiated after

the entry of Maruti Udyog Ltd. Which helped many new auto component

manufacturers emerged in 1980s. The Indian auto industry has evolved around three

major clusters geographically West, North & South of India, Major automotive

clusters – West of India-Mumbai, Pune, Nasik, and Aurangabad.

South - Chennai Bangalore, Hosur and North of India- Delhi, Gurgaon, Faridabad.

78

The set up of Tata motors, Bajaj, Mahindra & Mahindra, Skoda, General Motors etc.

and auto component manufacturers like Bharat Forge, DGP Hinoday, Kirloskar

Brothers, SKF Bearings, Kalyani Brakes etc.are all located in the west region.

Maruti Suzuki during 1990s created a base in the North accordingly the other auto

industry like Honda, Eicher etc., and auto component companies like Delphi, Denso

India, Lumax, Minda, Sona Koyo, Shriram Pistons etc., setup a hub in the central

North.

In the South region the auto & auto component industries are Ashok Leyland, Ford,

Toyota Kirloskar, Hyundai, TVS Motors, Brakes India, MICO, Lucas-TVS, Rane

Brakes, Sundram Fasteners etc. constituting a major hub.

The quality consciousness, value chain inherited through the automobile companies

towards the suppliers. Further the entry of more MNC’s & giant domestic auto

manufacturers prompted supply chain developments to enhance the productivity and

responsiveness towards both the ends suppliers as well as automobile companies.

The auto component industry can also be segmented through the supply chain

systems like first tier, second tier, third tier and fourth tier as the levels of supply

category and involvement in the supply chain of automobile company. The fourth tier

suppliers’ supplies raw material as small jobs while a second tier suppliers produces a

full auto components further the first tier suppliers identified as an OEMS/

Assemblers (Original equipment manufacturers). There are new direct suppliers, who

design systems and coordinate almost the entire chain encompassing the

manufacturing and assembly process and these are the Tier 1 and 0.5 who have major

involvement as a supplier in manufacturing of automobiles, they provide semi –

assembled modules of automobiles like steering system, rear axle system etc. which

can be directly fixed on the final assembly of the cars. The risks and challenges are

being transferred to the tier 1 &0.5 suppliers.

The total turnover of the Indian auto component industry was estimated at US$9

billion in 2006. The industry has the resources to manufacture the entire range of auto

products required for vehicle manufacturing, approximately 20,000 components. The

79

entry of global manufacturers into India during the 1990s enabled initiation of new

technologies, new products, improved quality and better efficiencies in operations.

This obviously acted as a catalyst to the local development of the auto component

industry.

The Indian auto component industry is widespread and highly fragmented. Estimates

by the Department of Heavy Industries, Government of India, indicate that there are

over 400 large firms who are part of the organized sector and cater largely to the

Original Equipment Manufacturers (OEMs). Approximately 10,000 firms exist in the

unorganized sector that operates in a tier-format. The firms in this segment operate in

low technology products and cater to Tier I and Tier II suppliers and also serve the

replacement market. Around 4% of the companies operating in the auto component

segment cater to 80% of the demand emanating from OEMs. Within the unorganized

segment, apart from supplying in the aftermarket, a number of players are also

involved in job work and contract manufacturing.

The Auto Component Manufacturers Association (ACMA) asserted the sector is

working towards the open market, a large number of joint ventures with leading

global manufacturers have already set up. The sector will grow at 15 percent CAGR

till the year 2012 and will achieve the position among the top five auto component

economies by 2025. The Industry is perceived tremendous potential for foreign direct

investments. The exports of auto components in 2006-07 soared to the US$ 3 billion,

which is remarkable. The ACMA estimates the global sourcing of components from

the country to double from US$ 2.95 to U.S$ 5.9 billion in 2008-09, and touch US$

20 billion within next seven years with the expansion of operations domestically and

overseas. The ACMA-Mckinsey tie-up vision anticipates the potential for the Indian

auto component industry to grow at US$ 40- 45 billion by 2015. The global auto

manufacturers look India as a salient manufacturing hub for auto components and

which rapidly gaining up the values of component they source from India.

The auto component sector has been one of the fastest growing segments of auto

industry, growing by over 28%, in nominal terms in the period 1995-98. The Industry

also sustained a high growth rate and could achieve growth of 24% in 2003, 16% in

80

2004-05 and 15% in 2005-06. The industry, over the years, developed the capability

of manufacturing all components required to manufacture vehicles, which is evident

from the high levels of indigenization achieved in the vehicle industry as well as the

components developed for the completely Indian made vehicles like the Tata Indica,

Tata Indigo, Mahindra Scorpio, Bajaj Pulsar and TVS Centra. The component

industry has now holistic capability to manufacture the entire range of auto-

components e.g. Engine parts, Drive, Transmission Parts, Suspension & Braking

Parts, Electricals, Body and Chassis Parts, Equipment etc. The component-wise share

of production, as indicated by the ACMA, is Engine parts-31%, Drive and

Transmission Parts-19%, Suspension & Braking Parts-12%, Electricals-9%, Body

and Chassis Parts-12%, Equipment-10%.

Over the last few years the Indian Auto Component Industry has created a robust

capacity base and world’s all major manufacturers have set up their manufacturing

unit in the country.

2.10.3 Growth Trends -

Low labor costs, availability of skilled labor and high quality consciousness among

Indian vendors have spurred the growth of auto component exports from India.

During 2003-2004, the exports of auto-components crossed the magic figure of US $

1 billion after having posted a healthy growth of 25%. During the year 2004- 2005,

the exports grew by 40% thereby taking the direct exports of components to a level of

US $ 1.4 billion. As per ACMA, in the year 2005-06 exports grew by 28% and

reached the level of US $ 1.8 billion. It is important to mention here that still it is very

low against the volume of world trade of 185 billion US $ in auto components.

More than 60% of the exports of auto-components are to USA and Europe, which

constitute high AQL (Accepted Quality Level) countries. Moreover, over the last 5

years, the structure of the customer base in the global markets has also undergone a

major change. In the 1990s more than 80% of the exports was to the international

aftermarket. In 2005, more than 70% of the exports are to the global OEMs and Tier 1

companies and only 30% is to the aftermarket. This signifies that the Indian

81

component industry has now reached a high degree of maturity in terms of quality

and productivity and has also developed capabilities in the area of design and

engineering, which are critical requirements for being a part of the global supply

chain.

Indian auto component manufacturing, currently constrained by lack of large

capacities, is slowly but steadily working on expanding capacities and automation

levels. As the users increasingly become discerning in their buying behavior, new

model introduction by the auto manufacturers has become the trend. Greater variety

in vehicle is offering challenges to the manufacturing capabilities and economies of

scale of component suppliers. Hence the component industry is constantly looking at

maintaining lean and efficient manufacturing systems. Having established themselves

in the domestic market, tapping opportunities abroad was a natural step for the auto

component manufacturers in their growth path. The Indian auto component industry

is targeting for a bigger share of the export market and is in the process of ramping up

its manufacturing capabilities to meet the capacity and quality requirements. During

2004, the auto component industry increased its investment by 17% while the

automation processes in this industry registered a growth of over 40%..

2.10.4 Challenges to auto component Industry.

From the current trends it may appears that auto- component industry is poised for

major growth, but this is not free from the challenges for the industry, policy

planners, government and other stake holders. Some of these challenges are

elaborated below.

2.10.4.1 Sustaining the growth rate.

There is a potential for much higher growth in the domestic market due to the fact

that the current car penetration level in India is just 7 cars per thousand. The increase

in purchasing power at the top echelon of about 300 million people in the country,

where the per capita income is over US $ 1000, implies that passenger car growth in

the domestic market is on the verge of a major and sustained boom. It is expected that

the passenger car market which was 1 million in 2003-2004 can easily cross the 3

82

million mark by 2015. This can lead to an increase in the size of the domestic auto-

component market from the current level of US $ 9.8 billion (2005-06) to at least US

$ 15 billion by 2015.

2.10.4.2 Need for innovations.

The competitiveness in the sector will largely depend on the capacity of the industries

to innovate and upgrade. The industry will also benefit if they have strong domestic

competition, home based suppliers and demanding local customers. There is no

denying of the fact that the factors like labor cost, duties, interest rate and economies

of scales are the most important determinants of competitiveness. But productivity is

the prime determinant of the competitiveness and also impacts the national per capita

income. The globally successful OEMs and auto makers will ultimately make their

base in places which are high on productivity factor and where essential competitive

advantages of the enterprise can be created and sustained. It would also involve core

products and process technology creation apart from maintaining productive human

resource and reward for advanced skills. The OEMs also look for the policies of the

state which stimulates innovations in new technologies.

2.10.4.3 Enhancement of share in global trade.

The global auto component industry is estimated to be US $ 1.2 trillion in value and

is likely to increase to US $ 1.7 trillion by 2015 as per ACMA. Sourcing from low

cost countries is likely to increase from US $ 65 billion in 2002 to US $ 375 billion

by 2015. Although India’s exports are still small (US $ 1.8 Billion in 2005-06 Prov.),

it could leverage this off shoring trend and the quality of its supply base to build

dominant top two position in auto component exports from low cost countries by

2015. A position In the top two would enable India to achieve export of US $ 20-25

billion by 2015. This would increase India’s share of world auto component trade

from 0.9 percent in 2005-06 (Prov.) to 2-2.5 percent by 2015, inclusive of domestic

consumption. Such a high growth in the Auto component Sector is expected to lead to

an additional 750,000 direct jobs in its sector along-with indirect employment of 1.8

million people over the next 10 years. In addition to creating incremental employment

83

of about 2.5 million people in direct and indirect jobs, it is also expected to result in

incremental revenue to the exchequer by US $ 3.8 billion. Investments in this sector

would also grow by US $ 15 billion from the current level of US $ 3.1 billion.

2.11 Initiatives of the Government of India for the growth of auto

sector.

In order to give a boost to the growth in this sector, the Government has taken several

initiatives. Some of them are as under.-

i. The Finance bill 2006 has given a further boost to the Automotive Industry by

reduction of the excise duty on the small cars. The reduction in the duty for raw

material to between 5 to 7.5% as compared to the earlier level of 10%, and the thrust

on infrastructure development.

ii. The Auto policy, 2002 recognizes the need to provide direction to the growth and

development of the automotive industry. As a result of constant persuasion by the

Department of Heavy Industry, some of the objectives of the Auto Policy have been

achieved. Imposition of excise duty on body building activity of Commercial

Vehicles, lower excise duty on the small cars, extension of 150% weighted deduction

on R&D expenditure to the automotive sector; increased budgetary allocation for

R&D activities in the sector and moving towards a lower duty regime are some of the

significant achievements and steps are being taken to further strengthen the capability

of the sector.

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