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AUTOM OTI VE IN DU ST RYOctober 2007
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www.ibe.org
PROFILE OF INDIAN
AUTOMOTIVE INDUSTRY
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Evolution o the Indian automobile industry
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Pre 1983 1983-1993 1993-2007
Closed market Growth of market limited by supply Outdated models
- Players Hindustan Motors Premier
Telco Ashok Leyland Mahindra & Mahindra
Japanisation - GoI-Suzuki joint ventureto form MarutiUdyog
Joint ventureswith companies incommercial vehicles
and components
- Players Maruti Udyog
HindustanMotors
Premier
Telco Ashok Leyland Mahindra &
Mahindra
Delicensing of sector in1993
Global major OEMs start
assembly in India (GM,Ford, Honda, Hyundai)
Imports allowed fromApril 2001 alignment ofduty on components andparts to ASEAN levels
Implementation of VAT
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Indiaspositioninworldproduction
2nd in two wheelers
11th in passenger cars
13th in commercial vehicles
Indian auto industry sales grew to 11.12 billion
units in 2006-07, exhibiting an impressive CAGR
o 15.5% during the past 5 years
Two wheelers have the maximum share in the
industry by volume, ollowed by passenger
vehicles, three wheelers and commercial vehicles
Maximum growth has been witnessed in thecommercial vehicles segment, ollowed by
three-wheelers
Indian automobile industry crossed a historic landmark o
10 million vehicles in 2006-07
Source: SIAM, IMaCS analysis
Automotive sales (domestic and exports )
CAGR15.5%
5.412002
11.122007
2006
8.532005
7.292004
6.252003
Segment Share in total CAGR
Two wheelers 76.2% 14.5%
Passenger vehicles 14.2% 16.7%
Three wheelers 4.9% 20.5%
Commercial vehicles 4.7% 26.7%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
million units
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Tata Motors
Mahindra & Mahindra
Bajaj Auto
TVS Motors
Hero Honda
Bajaj Tempo
Ashok Leyland
Bharat Gorge
Sundram Fasteners
Rane Group
Shriram Pistons
RICO Auto
Sona Koyo Steering
Global OEM Indian OEM
GlobalSuppliers
IndianSuppliers
GM
Toyota
Ford
Hyundai
Maruti Suzuki
Honda
Skoda Volvo
Mercedes
Delphi
Visteon
Bosch
Denso
Valeo
Thyssen Krupp
The OEM as well as the component industry is highly competitive
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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The Indian auto industry is highly competitive
with a number o global and Indian auto companies
present
The supplier industry is equally competitive with
a mix o global and Indian players
The OEM as well as the component industry is highly competitive
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Most automotive players are present in more than one segment
Manufacturer Segments
Ashok Leyland LCVs, M&HCVs, buses
Asian Motor Works M&HCVs
Atul Auto Three wheelers
Bajaj Auto Two and three wheelers
BMW India Cars and MUVs
Daimler Chrysler India Cars
Eicher Motors LCVs, M&HCVs, busesElectrotherm India Electric two wheelers
Fiat India Cars
Force Motors Three wheelers, MUVs and LCVs
Ford India Cars and MUVs
General Motors India Cars & MUVs
Hero Honda Motors Two Wheelers
Hindustan Motors Cars, MUVs and LCVs
Honda Two wheelers, cars and MUVS
Hyundai Motors Cars and MUVs
Kinetic Motor Two wheelers
Manufacturer Segments
Mahindra & Mahindra Three wheelers, cars, MUVs, LCVs
Majestic Auto Three wheelers
Maruti Suzuki Cars, MUVs, MPVs
Piaggio Three wheelers, LCVS
Reva Electric Car Co. Electric cars
Royal Enfield Motors Two wheelers
Scooters India Three wheelersSkodaAuto India Cars
Suzuki Motorcycles Two wheelers
Swaraj Mazda Ltd LCVs, M&HCVSs, buses
Tata Motors Cars , MUVs, LCVs,M&HCVs, buses
Tatra Vectra Motors M&HCVs
Toyota Kirloskar Cars , MUVs
TVS Motor Co Two wheelers
Volvo India M&HCVs, buses
Yamaha Motor India Two wheelers
MUVs: Multi utility vehicles; MPVs: Multi purpose vehicles; LCV:Light commercial vehic les; M&HCVs: Medium and heavy commercial vehicles
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Two wheelers industry is dominated by motorcycles
2003
2002
Domestic two wheeler industry
Source: SIAM, IMaCS Analysis
4.81
4.25%
Break up o the industry by segment
n Motorcycles n Scooters
n Mopeds
83%
12%
Scooter/Scooterette :
Wheel size less than or
equal to 12 inches
Motorcycle: Wheel size
more than 12 inches
Mopeds: Engine capacity
less than 75 cc with xed
transmission, wheel size
more than 12 inches Electric Two Wheelers:
Electrically Driven
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Million units
2004
2007
2006
2005
CAGR13%
5.36
7.86
7.05
6.21
0 1 2 3 4 5 6 7 8
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Domestic two wheeler industry has steadily
grown at a CAGR o 13% to reach 7.85 million
units in 2006-07
Motorcycle segment has attained highest growth
and dominates the market
Entry level bikes (engine power below 125 cc
and price US$ 850-1,100) account or around 80%
sales
Cost o ownership and economics o operation
are key purchase criteria
Premium bike segment (engine power above
125 cc and price US$ 1,200-2,000) growing
at a aster pace as compared to the entry levelvehicles, an indication o increasing afuence
o users
Two wheelers industry is dominated by motorcycles
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Scooter segment as a whole has been shrinking,
except or the A2 segment
Bikes having engine capacity 75-125 cc corner
the major share o the two wheeler market
Cost o ownership and economics o operation
are most important criteria determining purchase
While the motorcycles segment is growing, the scooter segment is shrinking
Segment Description Share in2001-02
Share in2006-07
CAGR
A1 Scooter with engine capacity lessthan 75 cc
5% 0% -33.9%
A2 Scooter with engine capacity between 75-125 cc
5% 10% 32.9%
A3 Scooter with engine capacity
between 125-250 cc
12% 1% -27.7%
B2 Motorcyclewithengine
capacitybetween75-125cc
62% 66% 14.9%
B3 Motorcyclewithengine
capacitybetween125-250cc
5% 17% 44.8%
B4 Motorcycle with engine capacity
above 250 cc
1% 1% 5.7%
C1 Mopeds 10% 5% -2.7%
Segment-wise analysis o two wheeler market
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Hero Honda: Largest Two-wheeler manuacturer
in the world
Bajaj Auto: Second largest Two-wheeler
manuacturer in India and the largest 3 wheeler
manuacturer TVS Motor Co: Third largest Two-wheeler
manuacturer in India. Established a manuacturing
acility in Indonesia
Honda Motors: Has recently entered the Indian
market through its direct subsidiary (in addition
to its joint venture Hero Honda)
Suzuki: Has recently entered the Indian marketthrough its direct subsidiary
The domestic two wheeler market is dominated
by Indian as well as oreign players
Market share o key players in 2006-07
Source: SIAM, IMaCS analysis
n Hero Honda Motors n Bajaj Auto Ltd
n TVS Motor Co, n HMSIL
n Others
42%
27%
19%
9%
3%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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In the Two-wheeler market in India, competition is
intense with around 10 players competing or the
share o the industry
The players include global giants like Honda, Suzuki,
Yamaha as well as Indian players like Bajaj and TVS
The market leader is Hero Honda Motors, closely
ollowed by Bajaj Auto
Industry is characterised by requent new product
launches, with over 20 models launched in 2006-07
The domestic two wheeler market is dominated
by Indian as well as oreign players
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Two wheelers exports have grown at an impressive CAGR o 42%
Source :SIAM, IMaCS Analysis
Two wheeler exports rom India
Thousand units
16%
10%
Market share o key players in exports 2006-07
Source: SIAM, IMaCS Analysis
n Bajaj Auto n Hero Honda Motors Ltd
n TVS Motor Company n Yamaha India
n Others
46%
15%
13%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
CAGR42.8%
104.22002
179.72003
265.12004
366.42005
513.22006
619.22007
0 700100 200 300 400 500 600
(in 000 units)
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Exports o two wheelers have grown at over
42% CAGR in last 5 years
Majority o exports are to Bangladesh, Sri Lanka,
Bhutan and Nepal
Highest growth (CAGR o 57.2%) witnessed
in motorcycles segment, which constituted
88% o Two-wheeler market
Most o the bikes exported were those with
engine capacity below 125 cc, indicating
preerence or Indian made economy bikes
Bajaj Auto is the market leader in exports with
46% share
Two wheelers exports have grown at an impressive CAGR o 42%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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200 1400800600 1200400 1000
Passenger vehicles segment in India is dominated by cars
Domestic passenger vehicles industry
78%
Source: SIAM, IMaCS Analysis
n Passenger cars n SUVs/MVs
22%
Domestic passenger vehicles industry
thousand units
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Source: SIAM, IMaCS Analysis
2002
2003
2004
2005
2006
2007
CAGR15.4%
675.1
707.2
902.1
1061.6
1143.1
1379.7
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The domestic Indian passenger vehicles market
has grown at a CAGR o 15.4% over the last
5 years to reach 1.38 million units in 2006-07
Passenger cars, contributing to 78% o volumes, grew
at a CAGR o 16%
The remaining share is with utility vehicles and
sports vehicles
Passenger vehicles segment in India is dominated by cars
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Maruti Udyog: Largest passenger car manuacturer
in the country, India considered as strategic market
by Suzuki
Tata Motors: Largest automotive player in the
Indian industry; launching the Rs. 1 lakh (US$ 2,500) car Hyundai Motors: Third largest passenger car
manuacturer in India, has established India as one
o its manuacturing bases in the world
All major global players in passenger vehicles segment
have a presence in India
Market shares o key players in 2006-07
Source: SIAM, IMaCS Analysis
n Maruti Udyog Ltd. n Tata Motors Ltd . n Hyundai Motor India Ltd.
n Mahindra & Mahindra n Toyota n Others
14%
16%
46%
7%
4%
13%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Mahindra & Mahindra: Amongst the largest players
in the multi utility vehicles segment, has tied up
with Renault or manuacturing and marketing o
Logan brand o cars in India
Toyota: Has vision o capturing 10% share o theIndian passenger car market by 2010
Honda Motors: One o the leading players in the
Indian premium cars segment
Ford: Leading player in the premium cars segment
General Motors: Leading player in the premium
segment; entered the compact car segment recently
All major global players in passenger vehicles segment
have a presence in India
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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There are more than a dozen manuacturers
in the industry
Most o the leading global players have a presence in
India in the orm o joint ventures or subsidiaries
The industry leader is Maruti Udyog with46% market share, closely ollowed by Tata Motors
and Hyundai Motors at 16% and 14% respectively
All major global players in passenger vehicles segment
have a presence in India
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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India is increasingly becoming a manuacturing hub or passenger cars
Cars Exports rom India
Thousand unitsMarket share o key players in Exports 2006-07
Source: SIAM, IMaCS Analysis
n Hyundai Motor India Ltd. n Maruti Udyog
n Ford India Pvt Ltd. n Tata Motors
n Others
20%
58%
12%
9%
1%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Source: SIAM, IMaCS Analysis
CAGR30%
53.172002
72.012003
129.292004
166.402005
175.572006
198.482007
0 25 50 75 100 125 150 175 200
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Exports o cars rom India have grown
at a CAGR o 30% CAGR in the last 5 years
to reach 198 thousand units in 2006-07
Hyundai Motors is the market leader in exports
o cars with 68% share; the company uses India
as a manuacturing base or compact cars across
the globe
Exports are made to South America, Arica,
Europe, Latin America and the Middle East
India is increasingly becoming a manuacturing hub or passenger cars
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Commercial vehicles segment has witnessed
the highest growth rate in the automotive industry
Breakup o the Industry by segment
n M & HCV Goods n LCV Goods
n M & HCV Passenger n LCV Passenger
53%36%
6%5%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Domestic CV Industry
CAGR26%
146.672002
190.682003
260.112004
318.432005
351.042006
467.882007
0 100 200 300 400 500
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Commercial vehicles segment has witnessed
the highest growth rate in the automotive industry
Domestic CV industry sales reached 467.88 thousand
vehicles in 2006-07, registering a CAGR o
26% over last 5 yrs
Share o LCVs is gradually increasing, indicating the
emergence o hub and spoke model o transportation
While the passenger bus industry has seen only a
moderate growth, goods industry grew 37% in
FY 2006-07
Goods industry is dominated by multi axle vehicles,
which account or nearly 50% o the market
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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CV industry is dominated by Indian players
Tata Motors Ltd: Largest commercial vehicle
manuacturer in the country, has acquired the Korean
manuacturer Daewoo Gap Motors
Ashok Leyland Ltd: Second largest player with
considerable market share in M&HCV segment; has
ormed a JV to manuacture LCVs with Nissan
Mahindra & Mahindra Ltd: Relatively new player in the
segment; has ormed JV with International Trucks to
manuacture M&HCV trucks in India
Eicher Motors Ltd: Leading player in the LCV trucks
segment; has entered the M&HCV trucks segment
recently
Swaraj Mazda Ltd: One o the leading players in theLCV segment
Volvo India: One o the leading players in luxury
passenger buses and heavy duty tippers
Market Shares o Key Players in 2006-07
Source: SIAM, IMaCS Analysis
n Tata Motors Ltd n Ashok Leyland Ltd
n M&M Ltd n Eicher Motors Ltd
n Others
64%
10%
16%
6%4%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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CV industry is dominated by Indian players
Tata Motors is the market leader in both goods and
passenger segments, closely ollowed by Ashok Leyland
LCV market is dominated by Tata Motors, ollowed
by Mahindra & Mahindra
Introduction o Tata Ace has contributed signicant
growth in the sub 1 tonne segment
All the players in the segment are in the process o
enhancing the capacities and launching new products
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Indian CV exports have witnessed a more impressive growth
CV Exports rom India
Thousand units
Source: SIAM, IMaCS Analysis
Market Share o Key Players in Exports
n Tata Motors n Ashok Leyland
n M&M Ltd n Others
6%
11%
71%
12%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Source: SIAM, IMaCS Analysis
CAGR33.2%
11.872002
12.262003
17.432004
29.942005
40.60
2006
49.772007
0 10 20 30 40 50
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Indian CV exports have witnessed a more impressive growth
Exports have grown at a ast pace o over
33% over the last 5 years
Tata Motors accounts or more than 70% o the
CV exports, with Ashok Leyland and Mahindra
& Mahindra making up or a large portion
o the balance
LCV goods carriers accounted or 52% o the
overall exports
Major portion o the exports are to Sri Lanka,
Gul countries and Arica
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Growth in three wheelers has been driven by the need
or low cost last mile transportation system
Break-up o Industry by segment
Source: SIAM, IMaCS Analysis
n Passenger n Goods
41% 59%
Domestic three wheeler Industry (units)
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Source: SIAM, IMaCS Analysis
CAGR15%
200.282002
231.532003
284.082004
307.862005
359.922006
403.912007
0 500100 200 300 400
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Growth in three wheelers has been driven by the need
or low cost last mile transportation system
Three Wheeler sales in India touched a new record
o 0.4 Million registering a growth o 15% CAGR over
the last 5 years
The proportion o Goods carriers in the
proportion o overall sales has doubled
indicating towards the increased need or
low cost last mile transportation systems
Sub 1 tonne segment in Goods accounted
or 73% o the sales and Sub Four seater segment
in passenger versions accounted or 97%
o the sales
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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The three wheeler market is dominated by Bajaj Auto
BajajAutoLtd. : Market leader in the
Three wheeler segment, in the process o revamping
its product portolio
PiaggioVehicles : The Italian manuacturer is one
o the leading players with ast growing market
share, in the process o making India as their
global hub M&MLtd: One o the leading players in the segment
AtulAutoLtd: Have introduced new products
in the rear engine segment, and also is a manuacturer
o Chakda a Three wheeler reengineered rom Two
wheeler, popular in the western parts o the country
ForceMotorsLtd: A JV between Bajaj Tempo
and MAN AG o Germany; leading player in the
goods segment
Market Share o Key players 2006-07
Source: SIAM, IMaCS Analysis
n Bajaj Auto n Piaggio Vehicles
n M&M n Others
11%
8%
45%
36%
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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The Three wheeler market is dominated by Bajaj Auto
Bajaj Auto emerged the leader in Three Wheeler
industry with 45% share, closely ollowed
by Piaggio with 36% share
Bajaj Auto lead the passenger carrier segment
with 58% share, while Piaggio lead the goods
segment with 40% market share
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Exports o Three wheelers have been growing rapidly,
with Bajaj Auto the clear market leader
Exports o three wheelers touched a new high
o 143.9 thousand units, registering a robust
growth o 56% CAGR over the last 5 years
This has been contributed almost entirely
by Bajaj Auto, which accounted or around
98% o exports in 2006-07
Bajaj Auto exports to Sri Lanka, Egypt, Nepal,
Bangladesh among other countries
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Three wheeler exports and growth
Thousand Units
175
Source: SIAM, IMaCS Analysis
CAGR56.2%
15.462001-02
43.372002-03
68.142003-04
66.802004-05
76.882005-06
143.902006-07
0 150125100755025
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Indian OEM Foreign Partner Type of Partnership
Maruti Suzuki Suzuki Motor Corporation- Japan Equity partner
Mahindra Logan Renault Joint Venture
Tata motors Fiat Tie-up for manufacturing and marketing in India
KINETIC Group Sanyang Industr y Co Ltd (SYM-Taiwan
Technology
Italjet -Italy Tie-up for manufacturing and distribution
Hero Honda- Japan Technology
Hero Cycles Ultra Motor Company, U.K Technology
Bajaj Auto Kawasaki Heavy Industries Ltd,Japan
Engine Technology
Engine Technology Technology
Kubota Corp, Japan Technology
L&T Ltd Scania-Spain Tie-up for marketing in India
Ashok Leyland Hino-Japan Engine Technology
Irizar-Spain Bus body Technology
ZF-Germany Gearbox Technology
Tata Motors Marco Polo-Brazil Bus/Coach Technology
Cummins-USA Engine Technology
Indian rms are increasingly partnering with oreign rms
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Three major automotive clusters exist in India
Major automotive clusters - Mumbai-Pune-Nasik-
Aurangabad (West), Chennai-Bangalore-Hosur
(South) and Delhi-Gurgaon-Faridabad (North)
Export oriented companies have ormed base
in the West/South regions, due to proximity
to ports
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Three major automotive clusters exist in India
North/Central
Ashok Leyland Eicher
Force Motors Hero Honda
Hindustan Motors Honda
Honda SIEL ICML
Kinetic LML
Majestic Maruti Suzuki
Piaggio Yamaha
Swaraj Mazda Tata Motors
East
Hindustan Motors Tata Motors
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Delhi-Gurgaon-Noida-Ghaziabad
Kolkata
Jamshedpur
Chennai Bangalore Hosur
Ludhiana
Haridwar
Pitampur
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Three major automotive clusters exist in India
West
Ashok Leyland Atul Auto
Bajaj Auto Daimler Chrysler
FIAT Force Motors
GM Greaves
Kinetic M & M
Piaggio Premier
Skoda Tata Motors
Delhi-Gurgaon-Noida-Ghaziabad
Kolkata
Jamshedpur
Chennai Bangalore Hosur
Ludhiana
Haridwar
Pitampur
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Three major automotive clusters exist in India
South
Ashok Leyland Eneld
Ford Greaves
Hindustan Motors Hyundai
Mahindra & Mahindra
Tatra Volvo
Toyota Kirloskar TVS Motors
Delhi-Gurgaon-Noida-Ghaziabad
Kolkata
Jamshedpur
Chennai Bangalore Hosur
Ludhiana
Haridwar
Pitampur
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Indian Auto Policy is designed or supporting the growth o the industry
Governments intention onharmonizing the regulatorystandards with the rest of world
Investment Incentives by the LocalState Governments: Most States
Customise incentives for LargeInvestments
Automatic Approval for Foreign
equity investment up to 100% No Minimum Investment Criteria
Weighted Tax Deduction up to
150% for in-house research andR&D activities
Indian Auto Policy 2002 CONCERN FOREMISSIONS
INVESTMENTINCENTIVES
LOWENTRY
BARRIER
EMPHASISON R&D
Source: ARAI, IMaCS Analysis
In 2002, the Indian Government
ormulated an Auto Policy aimed
at promoting an integrated, phased
enduring and sel-sustained growth
o the industry
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Indian automotive regulations are in the process
o being aligned with European regulations
Indian automotive regulations are closely aligned
to the ECE regulations. The diagram below depicts
the level o alignment o the Indian regulations with
the ECE regulations
The key regulations that are likely to impact the
auto industry and create the need or world class
products in the uture are crash related regulations
and introduction o Bharat Stage IV normsSource: ARAI, IMaCS Analysis
0
2007
50 100 122
81 21 20
n Fully/ Partially Allign nIn Process o Being Alignedn
Items/ Regulations to be covered
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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Saety and emission related regulations in India - Achievements and Plans
NCR and 10Major Cities
NCR and 10Major Cities
Entire Country
NCR and 3Major Metros
NCR and 10Major Cities
Entire Country
Entire Country
Achievements Till Date Plan
Emission Regulations
2000 2001 2003 2005 2010
EURO - IV
EURO - III
EURO - II
EURO - I
Safety Regulations
BrakesSteering eortGradeabilityInstallation
o mirror, Horn & Lighting devicesRear Under
run Protective Devices (RUPD) Lateral Protective
Devices (LPD)Saety beltElectro Magnetic
Intererence (EMI)Wiping systemRear ViewMirror etc
Anti Brake Skid 2007
Truck cab occupant
protection -Crash
Super structure o bus.
Airbags
Electro Magnetic Compa-tibility (EMC)
Front Under run protecti-
ve Devices (FUPD)
Source: ARAI, IMaCS Analysis
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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The Government o India has taken a strong initiative
to strengthen automotive related R&D inrastructure
Rae Bareilly Centre
Complete homologation services to Agri Tractors, Off roadVehicles , Gensets as per Indian or Global standards & DriverTraining centre
Center of Excellence For Accident Data Analysis
Commissioning Schedule Phase-I : July 2010; Phase-II :Aug2010
Ahmednagar-VRDE Up-Gradation
Research, Design, Development and Testing of Vehicles
Centre of Excellence For Photometry, EMC, EMI,Test Tracks
Commissioning Schedule Phase-I : July 2010; Phase-II :Aug2010
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Facilities o National Automotive Testing and R&D
Inrastructure Project (NATRIP)
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The Government o India has taken a strong initiative
to strengthen automotive related R&D inrastructure
Pune- ARAI Up-Gradation
Complete homologation services to all vehicle categories asper Indian or Global Standards
Centre of Excellence For Power Training Development,Materials, Fatigue
Commissioning Schedule Phase-I : 2008; Phase-II : 2009
Manesar- iCAT
Complete homologation services to all vehicle categories as
per Indian or Global Standards
Center of Excellence For Component Development, NVH
Commissioning Schedule Phase-I : 2008; Phase-II : 2010
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Facilities o National Automotive Testing and R&D
Inrastructure Project (NATRIP)
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The Government o India has taken a strong initiative
to strengthen automotive related R&D inrastructure
Silchar Centre
Hill area Driver Training Centre and Inspection &
Maintainence Facilities
Centre of Excellence For Driver Training
Commissioning Schedule Phase-I : 2008; Phase-II : 2010
Indore -Proving Grounds
Complete Testing Facilities to all vehicle categories as per
Indian or Global Standards
Centre of Excellence For Vehicle Dynamics, Tyre Development
Commissioning Schedule Phase-I : 2009; Phase-II : 2010
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Facilities o National Automotive Testing and R&D
Inrastructure Project (NATRIP)
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The Government o India has taken a strong initiative
to strengthen automotive related R&D inrastructure
Chennai Centre
Complete homologation services to all vehicle categories as
per Indian or Global Standards
Center of Excellence For Infotronics,EMC,Passive Safety
Commissioning Schedule Phase-I : 2008; Phase-II : 2011
PROFILE OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Facilities o National Automotive Testing and R&D
Inrastructure Project (NATRIP)
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www.ibe.org
GROWTH POTENTIAL OF INDIAN
AUTOMOTIVE INDUSTRY
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Growth drivers or the Indian automotive industry
GROWTH POTENTIAL OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
Increasing consumerdemand
New productslaunches
Indian AutomotiveIndustry
Government
Policies
- Contemporary products
- Shorter lie cycle
- Export competitiveness
- Reduced cost to consumer- India emerging as a manuacturing hub
- Overall economic growth
- Lower duties and taxes
- Growth in income levels
- Easier nancing
Cost
Competiveness
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Indian Automotive Mission Plan Vehicle sales
expected to grow to 32 million by 2015-16
The size o the Indian automotive industry
is expected to grow at 13% p.a over the next
decade to reach around US$ 120-159 billion
by 2016
The total investments required to support the
growth are estimated at around US$ 35-40 billion
The Two wheelers industry is expected to lead
the growth, with an estimated sales o 27.8
million units by 2016
Total export in the automotive sector would
be around US$ 30-5 billion, o which component
exports would account or US$ 20-25 billionand vehicle exports or the rest
Potential vehicle sales in India (2015-16)
million units
0.64
Total
Three
Wheelers
Two
wheelers
CVs
Cars
Source: SIAM, ACMA, AMP Vision & IMaCS Analysis
GROWTH POTENTIAL OF INDIAN AUTOMOTIVE INDUSTRYAUTOMOTIVE INDUSTRY October 2007
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INDIA AS A
MANUFACTURING HUB
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Automotive exports have grown at an impressive CAGR
o 40% in the last 5 years
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
Indian automotive exports have grown
at a high CAGR o 40.5% over the last 5 years,
with astest growth in Three wheeler segment,
ollowed by Two wheelers
India is increasingly becoming a manuacturing
hub o small cars or global majors
Automotive Exports (thousand units)
Source: SIAM, IMaCS Analysis
CAGR40.5%
184.682002
307.312003
479.922004
629.542005
806.222006
1011.282007
0 200 400 600 800 1000 1200
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Global auto companies are taking advantage o Indias manuacturing base
Hyundai Motors - 36% o its production
is exported to 67 countries. Hyundai has
shited its entire production o the Atos Prime,
its compact model, to its Chennai Plant. Similar
plan is on the cards or Getz. Hyundai is planning
to double the production capacity to 0.6 million
cars, primarily to meet export demand
Suzuki Motor Corp: It is investing US$ 2 billion
in India, and plans to export 200,000 cars rom
India by 2010
Ford Motor Co: It exports 58% o the total
production rom India
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Global auto companies are taking advantage o Indias manuacturing base
Tata Motors: The company plans to make its
US$ 2,500 car available in other markets.
It is setting up showrooms across Arica and
has tied up with Italys Fiat to use its
South American sales network
Nissan Motor: Has recently announced plans
to make cars in India and export themto Europe
Honda Motor: Has begun building a new
plant or premium hatchbacks in western India
Toyota: Has set us a transmission plant
in India to meet its regional demand
Source: Industry News
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Proven product developmental capabilities
- More than 125 Fortune 500 (including
large auto companies) have R&D cen-
tres in India
- Companies can leverage Indias acknow-
ledged leadership in the IT industry
Proximity to Markets
- Proximity to other Asian economies
- Proximity to the emerging markets like
Arica
- Shipments to Europe are cheaper than
those rom Brazil and Thailand
High quality standards
- 9 Indian component manuacturers have
won the Deming Award or quality
- Most leading component manuacturers
are QS and ISO certied
Competitive manuacturing cost
- Skilled labour costs amongst the lowest
in India
Export Potential
- Total value o exports by 2015 expected
to reach US$ 810 billion or vehiclesand US$ 2025 billion or components
Availability o Manpower
- 0.4 million Engineering graduates pass
out every year- 7 million enter workorce every year
Large and growing domestic demand
- Demand growth o 14% CAGR makes
India one o the astest growing markets
Stable economic policies
- Continuity in economic reorms
and policies related to investments
India as
an Auto
Hub
Several actors make India a avourite investment destination
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Competitiveness o Indian automotive manuacturing
In order to emerge as a manuacturing hub,
India would ace competition rom other low
cost countries such as
China
Thailand
Brazil
IMaCS has compared the cost competitiveness
o automotive (car and CV compared separately)
manuacturing in India with respect to these
countries in terms o actors like
Taxes and duties
Cost o manuacturing (or example, power
and uel costs, labour costs, includingproductivity interest rates)
Economies o scale
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Competitiveness o Indian automotive manuacturing
Competitiveness o manuacturing in India can
be improved by reducing the level o taxes and
the cascading impact o taxes and by improving
the business inrastructure
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Tax structure in India vis--vis other countries
The burden o direct and indirect taxes is higher
in India than in other countries
India Brazil China Thailand
Thailand 16.36% - - -
VAT 12.5% 15% 17% 10%
Other Taxes - 18%* - -
Corporate Tax 34% 28% 33% 30%
Exemptions Specificpackagesprovided by
states for largeinvestments
Tax incentivesfor companiesin export
processing zones
Preferentialcorporatetax policies
for ForeignInvestmentEnterprises
Tax incentivesfor investmentsoutside central
zone
Import duty onrubber
13% 16% 8% Free
Import duty onsteel
8% 4% 2% 10%
*Refers to local taxes
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Labour & Labour Productivity in India vis-a-vis other countries
India compares avourably with other low cost
countries in productivity adjusted labour cost
Indian labour productivity in the manuacturing
sector is on an increase with the application o
production management techniques and many
companies have doubled their productivity
in last 5 years
India Brazil China Thailand
Labour cost (US$/hour) 0.7 4.1 0.7 0.72
Labour cost (US$/day)* 5.6 32.8 5.6 5.76
Productivity index** 1.0 2.0 1.0 1.2
Productivity adjustedlabour cost (US$/day)
5.6 16.4 5.6 4.8
*Assuming 8 hour shift per day** Gross value added per person employed when compared to India
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Power Cost in India vis--vis other countries
Power cost in India is the highest amongst the
competing countries
However, power cost accounts or around
3% o the overall cost structure, hence not a
signicant disadvantage
Power costs in India varies by state and
is as low as US$ 0.1 in states like Maharashtra
With privatisation and competition in the
emerging Indian power sector, cost o power
is expected to come under control
Interest rates in India are high as compared
to competing countries, but expected to soten
in the uture
Country Cost per kwh (US$)
India 0.14
Brazil 0.05
China 0.03
Thailand 0.11
Power costs
Country Annual lending interest rate
India 10-11%
Brazil 14-16%
China 5-6%
Thailand 7-8%
Interest costs
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Cost competitiveness - India versus China
Indian manuacturers suer rom a cost
disadvantage vis--vis Chinese manuacturers
mainly because o higher level o taxes and their
cascading impact, higher cost o labour (arising
out o infexible labour laws) and higher interest
costs and power and uel costs
Cost breakup Cars CV
Cost of vehicle of an Indian
Company
100 100
Less
Taxes and Duties Net state level
levies and cascadingimpact of taxes
-4.8% -5.4%
Import duty on rawmaterials
-1.8% -1.6%
Corporate taxes - -
Total -6.6% -7.0%
Industry costs Power & fuel -3.4% -3.6%
Labour cost - -
Cost of funds -0.8% -0.8%
Total -4.2% -4.4%
Cost disadvantagefor India
-10.8% -11.4%
Economies of scale no diff no diff
Totalcost
disadvantagefor
India
-10.8% -11.4%
Source: Government websites, discussions with leading automotive players, IMaCS analysis
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Cost competitiveness - India versus Thailand
Indian vehicle manuacturers have a cost
disadvantage vis--vis Thai vehicle manuacturers,
primarily due to higher level o taxes in India
However, the large market potential o the
Indian market more than makes up or this
disadvantage
Cost Break-up Cars CV
Cost of vehicle of an Indian
Company
100 100
Less
Taxes and Duties Net state level
levies and cascadingimpact of taxes
-5.61% -5.86%
Import duty on rawmaterials
-0.60% -0.20%
Corporate taxes -0.20% -0.20%
Total -6.41% -6.26%
Industry costs Power & fuel -1.03% -1.11%
Labour cost -1.28% -1.56%
Cost of funds -0.36% -0.36%
Total -2.67% -3.03%
Cost disadvantagefor India
-9.08% -9.29%
Economies of scale no diff no diff
Totalcost
disadvantagefor
India
-9.08% -9.29%
Source: Government websites, discussions with leading automotive players, IMaCS Analysis
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
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Cost Competitiveness - India versus Brazil
India is competitively positioned vis--vis Brazil
in cars as well as CV
India enjoys greater scale advantage as compared to
Brazil in the case o cars as capacity utilisation
in India is better, despite Brazil having larger
installed capacities
Cost Break-up Cars CV
Cost of vehicle of an Indian
Company
100 100
Less
Taxes and Duties Net state level levies
and cascading impactof taxes
-3.1% -3.9%
Import duty on rawmaterials
- -
Corporate taxes - 0.1% - 0.1%
Total -3.2% -4.0%
Industry costs Power & Fuel - 2.0% - 2.8%
Labour cost 7.6% 16.2%
Cost of funds 0.9% 1.6%
Total 6.5% 15.0%
Cost advantage forIndia
3.3% 11.0%
Economies of scale 8.3% no diff
Totalcost
advantageforIndia
11.6% 11.0%
Source: Government websites, discussions with leading automotive players, IMaCS Analysis
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
INDIA AS A MANUFACTURING HUB
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Conclusions
India has a cost advantage when compared
to Brazil
However, India suers rom a cost disadvantage
vis--vis China and Thailand, primarily due
to high level o taxes and their cascading impact
India, in the near uture is expected to go ahead
with the abolition o interstate Central Sales Tax(CST), which will reduce the cascading impact
o taxes to some extent
INDIA AS A MANUFACTURING HUBAUTOMOTIVE INDUSTRY October 2007
AUTOMOTIVE INDUSTRY
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Conclusions
Implementation o Goods & Services tax
(along the lines o VAT) and abolition o all
other taxes by 2010 is under consideration, which
will reduce the taxation loading on the automotive
sector considerably. This step is expected to
strengthen Indias uture position as a leading
automobile manuacturing hub
Various steps being taken by the Indian
government in improving inrastructure would
reduce the disadvantage that India suers rom
because o poor inrastructure that causes
project delays, delays in deliveries and so on.
This would increase the demand or road
transportation in the country
AUTOMOTIVE INDUSTRYOctober 2007
AUTOMOTIVE INDUSTRY
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This presentation has been prepared jointly by the India Brand
Equity Foundation (IBEF) and ICRA Management Consulting
Services Limited, IMaCS (Authors).
All rights reserved. All copyright in this presentation and related
works is owned by IBEF and the Authors. The same may not be
reproduced, wholly or in part in any material orm (including
photocopying or storing it in any medium by electronic
means and whether or not transiently or incidentally to someother use o this presentation), modied or in any manner
communicated to any third party except with the written
approval o IBEF.
This presentation is or inormation purposes only. While due
care has been taken during the compilation o this presentation
to ensure that the inormation is accurate to the best o the
Authors and IBEFs knowledge and belie, the content is not
to be construed in any manner whatsoever as a substitute or
proessional advice.
The Author and IBEF neither recommend or endorse any
specic products or services that may have been mentioned
in this presentation and nor do they assume any liability or
responsibility or the outcome o decisions taken as a result
o any reliance placed in this presentation.Neither the Author nor IBEF shall be liable or any direct or
indirect damages that may arise due to any act or omission
on the part o the user due to any reliance placed or guidance
taken rom any portion o this presentation.
DISCLAIMER
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AUTOMOTIVE INDUSTRYOctober 2007