1
INDIAN AUTO COMPONENT INDUSTRY
AN OVERVIEW
2
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
3
Introduction
Automotive Component Manufacturers Association of India
Role
Members
Quality System
Re-Christened
Inception
An apex agency of the Indian Automotive Industry
600+ companies forming majority of the auto component output in the organized sector
ACMA operates on Quality System basedon ISO 9001:2000
In the year 1959 as The All India Automobile & Ancillary IndustriesAssociation (AIA & AIA)
As Automotive Component Manufacturers Association of India in the year 1982
4
Collection &Dissemination of
Information
QualityEnhancement
TechnologyUp-gradation
Promotes IndianAutomotive Component Industry
Vital Catalyst for Industrial Development
Trade Promotion
ACMA and Its Services
5
Promote India as a Brand
Promote India as a Brand
Organize Business Development Delegation
Overseas
Organize Business Development Delegation
Overseas
Undertake ExportPromotional
Projects
Undertake ExportPromotional
Projects
Organize Participation in Overseas Automobile
Exhibitions & Fairs
Organize Participation in Overseas Automobile
Exhibitions & Fairs
Global Interaction through
Counterpart Association
Global Interaction through
Counterpart Association
Dissemination of Export Enquiries
Dissemination of Export Enquiries
Organize Private Exhibitions &
Suppliers Conference
Organize Private Exhibitions &
Suppliers Conference
Facilitate potentialBusiness Partnership of
JV / Strategic Alliance
Facilitate potentialBusiness Partnership of
JV / Strategic Alliance
Providing International
Sourcing Forums
Providing International
Sourcing Forums
Working closelywith IPOs in IndiaWorking closely
with IPOs in India
International Business Development
6
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
7
The Indian economy poised for Growth...
2.9
5.1
6.77.2
8.2
-2.2
2.7
3.6 4.05.6 5.2
7.99.2 9.8 9.3
5.7 5.45.9 5.8
4.3
-4
-2
0
2
4
6
8
10
1950's 1960's 1970's 1980's 1990's 2001-03 2004 2005 2006 2007 2008 2009 2010
Gro
wth
(%)
IndiaWorld
Slow growing closed economy Fast growing open economy
Transformation
Real GDP growth rate: India vs. World
Source: IMF Apr’09, Economic Survey 2008-09 & RBI Bulletin
Manufacturing27%
Agriculture21%Services
52%
Composition of GDPAverage Real GDP growth in last 5 year was 8.5%
GDP Per Capita is US $ 1018
Projected GDP growth in 2010-11 is 8.2%
Estimated
8
61.478.2
111.5
149.2
291 279
181.3
253
27%
43%
34%
15%
-4%
40%
22%
0
50
100
150
200
250
300
350
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-10%
0%
10%
20%
30%
40%
50%
Imports(US $ bln) Growth rate(%)
Imports (In US $ bln)
52.763.8
83.5
103.1
182.6 177
124.6
163
21%
31%
-3%
12%
23%
31%
21%
0
20
40
60
80
100
120
140
160
180
200
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-5%
0%
5%
10%
15%
20%
25%
30%
35%
Exports(US $ Bln) Growth rate(%)
Exports (In US $ bln)
4.2 3.15.5
27.3
33
2.6
24.57
15.7
-16%
-26%
185%
56%
112%
11%21%
0
5
10
15
20
25
30
35
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-50%
0%
50%
100%
150%
200%
FDI(US $ bln)# Growth rate(%)
FDI (In US $ bln)
75.4
107
142
252274
173.1
281
1369%
-10%
4%
62%
22%
42%
27%
0
50
100
150
200
250
300
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
FE Reserves* ( US $ bln) Growth rate(%)
FE Reserve (In US $ bln)
# Partly Estimated * As on May 19, 2010
Growing trade, Investments & Forex reserves…In
US
$ bn
In U
S $
bn
In U
S $
bn
In U
S $
bn
9Source: Economic Survey 2007-08
Exchange Rate is Market Driven & Continued Import Tariff Reduction
* As on April 20, 2010
Exchange Rate & Import Tariff
* Peak rate 10%
44.9 44.339.5
44.445.5 4749
3%-1%
24%
-4%
-13%
-6%
0
10
20
30
40
50
60
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)-20%
-10%
0%
10%
20%
30%
Exchange Rate Growth rate(%)
Exchange rate (Rs. Vs. USD)
15
12.5
8.57.5
7.57.5
10
0%
-15%
0%
-12%-17%
-20%
02468
10121416
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)-25%
-20%
-15%
-10%
-5%
0%
Import Tariff Growth rate(%)
Import Tariff
** *
Impo
rt T
arif
f (%
)
Exch
ange
rat
e (R
s.)
10
Low cost of Skilled Manpower & Rapidly growing Design Capability
Easy access to capital although interest rate is high
Continuously Improving Quality resulting in Export of Automobiles and Auto components
Low penetration rate of Cars (8/1000)
According to McKinsey, the middle class will grow from 50 million to 550 million by 2025
Infrastructure development ($500 billion in the next 5-6 years)
Long TermShort Term
Demand Drivers and their Impact…
11
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
12
New Hub :Uttaranchal
Auto Investments & Their Spread
Large number of Indian & Global OEMs across the countryLarge number of Indian & Global OEMs across the countryLarge number of Indian & Global OEMs across the country
NORTH
EAST
SOUTH
WEST
13
Vehicle production in India
2,200
150 120200
10,230
420
40
5,100
670
360
710
100
0
500
1,000
1,500
2,000
2,500
3,000
Passenger vehicles
SCVs LCVs M&HCVs Two- & Three-wheelers
Tractors Construction equipments*
2009 2015 (E) 2020 (E)
470 –530
540 –600
30,000 –33,500
940 –1,050
170 –190
1,100–1,220
390
8,700 –9,700
22,100
*Includes backhoes, track excavators, wheeled loading shovels, vibratory rollers and lif tall
Source: SIAM – EY study
In ‘0
00 u
nit
s
14
Two & Three wheelers
76%
Const. Equip.0%
Tractors2%
Passenger Vehicle
18%
M&HCV1%
LCVs1%
SCVs2%
Two & Three wheelers
72%
SCVs3%
LCVs1%
M&HCV1%
Passenger Vehicle
21%Tractors2%
Const. Equip.0%
Two & Three wheelers
76%
Const. Equip.0%
Tractors3%
Passenger Vehicle17%
M&HCV2%
LCVs1%
SCVs1%
Market share: 2009
Market share: 2015(E) Market share: 2020(E)
Vehicle production in India – Segment wise market share
Source: SIAM – EY study
15
“INDIA” – A Global hub for Compact CarsNew Plant Addition in the Last 1 Year
Increased local content - Creating Global CompetenceIncreased local content - Creating Global Competence
MarutiCapacity 250K
Investment US $ 380 mln
HyundaiCapacity Increased to 600K cars
Investment US $ 1 billion
Tata MotorsCapacity 500K
Investment US $ 240 mln
ToyotaCapacity 200K
Investment US $ 310 mln
FordCapacity 200K
Investment US$ 500 mln
General MotorsCapacity 140K
Investment $650 mln
Nissan-RenaultCapacity 400K
Investment USD 1 billion
VWCapacity 110K
Investment US $ 750 mln
HondaCapacity 60K
Investment $ 250 mln
16
Indian Automobile Industry-High Growth in all Segments
April-July 2010(Unit in Nos.)
Category ExportsSegm/Subsgmt
2009-10 2010-11 % Gr. 2009-10 2010-11 % Gr. 2009-10 2010-11 % Gr.Passenger Vehicles ( PVs ) 682,287 898,429 32% 131,308 143,136 9% 696,890 899,795 29%
M&HCVs 57,324 105,446 84% 5,329 7,492 41% 60,318 103,276 71%LCVs 88,484 118,484 34% 4,858 12,404 155% 84,316 117,976 40%Commercial Vehicles (CVs) 145,808 223,930 54% 10,187 19,896 95% 144,634 221,252 53%
Three Wheelers 162,721 234,581 44% 37,044 89,637 142% 164,517 240,163 46%
Two wheelers 3,209,740 4,213,454 31% 327,381 528,794 62% 3,182,891 4,192,634 32%
Grand Total 4,200,556 5,570,394 33% 505,920 781,463 54% 4,188,932 5,553,844 33%
April-JulyApril-July April-JulySales (Domestic+Exports)Production
17
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
18
Indian Auto Component Industry Focus: Global Best Practices
46
51
82
179
245
> 100 Million US $
> 50 ~ 100 Million US $
> 25 ~ 50 Million US $
> 5 ~ 25 Million US $
< 1 ~ 5 Million US $
Annual Turnover in Million US $
AC
MA
mem
bers
hip
(M
ore
than
60
0
mem
bers
)Significant number of companieswith Quality certifications & recognition:
• ISO 9000 : 552
• TS 16949 : 438
• QS 9000 : 33
• ISO 14001 : 204
• OHSAS 18001: 95
• JIPM: 3
• Deming Award : 11
• TPM Award : 15
• Japan Quality Medal : 1
• Shingo Silver Medallion : 1
Industry fast embracing modern shop-floor practices:
• 5-S; 7-W
• Kaizen
• TQM
• TPM
• 6 Sigma
• Lean Manufacturing
19
13
37
9.0023%
8.1620%
3.80-
22.0020%
2009-10
182120182120Exports as % of Turnover
-3729242122Imports as % of Turnover
12.0033%
7.301%
7.2033%
5.4023%
4.4017%
3.7521%
InvestmentGrowth rate
6.8030%
3.808%
18.402%
2008-09
5.2245%
3.5232%
18.0020%
2007-08
--
3.6045%
2.4830%
1.9033%
ImportsGrowth rate(%)
5.0032%
2.678%
2.4746%
1.6934%
Export Growth rate(%)
26.0018%
15.0025%
12.0038%
8.7029%
TurnoverGrowth rate(%)
2010-11(E)2006-072005-062004-05
E -> Estimated
(Value in US $ Billion)Auto Component Industry - Statistics
(Turnover includes supplies to OEMs, aftermarket sales and exports but sans imports. It does not take into account production for captive consumption by OEMs, components manufactured by non ACMA members whose majority supplies are non-automotive and the unorganized sector )
20
Auto Component Industry: Size
Turnover (In US $ bln)
Turn
over
(U
S $
bn
)
Source: ACMA - EY Vision 2020
6.78.7
1215
18 18.4
22
26
29%
38%
20%
2%
20% 18%
25%
0
5
10
15
20
25
30
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-110%
10%
20%
30%
40%
Growth rate(%)
CAGR: 21%CAGR: 21%
21
Body & structural40%
Electronics & electrical
10%
Engine & Exhaust20%
Interior10%
Suspension & Braking
10%
Transmission & Steering
10%
Product Range- 2009
Body & structural35%
Electronics & electrical
13%
Engine & Exhaust17%
Interior9%
Suspension & Braking
13%
Transmission & Steering
13%
Product Range- 2015(E) Product Range- 2020(E)
Auto Component Industry: Product Range
Source: ACMA - EY Vision 2020
Body & structural
31%
Electronics & electrical
16%
Engine & Exhaust
18%
Interior8%
Suspension & Braking
11%
Transmission & Steering
16%
2222
Auto Component Industry – Exports & Exports Markets
1.21.7
2.5 2.73.5 3.8 3.8
547%
30%
9%
32%
8%
42%
0%0.0
1.0
2.0
3.0
4.0
5.0
6.0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0%
10%
20%
30%
40%
50%
Exports Growth rate(%)
CAGR: 21%CAGR: 21%
Exports market size (In US $ bln)
Exports market
OEM/Trier-1: 80%
Aftermarket: 20%
Profile of ExportsAfrica7.4%
Asia28.1%
Australia1.1%Europe
36.9%
N.America24.0%
S.America2.5%
Expo
rts
(US
$ b
n)
Source: ACMA - EY Vision 2020
23
1.4 1.92.5
3.6
5.2
6.8
8.245%
20%
33%
45%
30%31%
0.0
2.0
4.0
6.0
8.0
10.0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-100%
10%
20%
30%
40%
50%
Imports Growth rate(%)
Imports market size (In US $ bln)
Auto Component Industry – Imports & Imports Markets
CAGR: 34%CAGR: 34%
Imports market
Asia54.34%
Australia0.22%
Europe36.03%
N.America8.28%
Africa0.20%
S.America0.92%
Impo
rts
(US
$ b
n)
24
Auto Component Industry Investments
Investment (In US $ bln)
2.7 3.13.8
5.4
7.2 7.3
9.0
12.0
4.4 23%
33%
23%
33%
1%
17% 17%
21%
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0%
10%
20%
30%
40%
Investments Growth rate(%)
CAGR: 20%CAGR: 20%
Inve
stm
ent
(US
$ bn
)
Source: ACMA - EY Vision 2020
25
Increased Component Outsourcing from India
Indian Components already Driving on your Roads…Indian Components already Driving on your RoadsIndian Components already Driving on your Roads……
26
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
27
Vision 2020: Domestic Auto Component demand
4.3 8.4 12.825.7
60.6
100.2
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2009 2015(E) 2020(E)
Aftermarket OE
$ 30 bn
$ 69 bn
$ 108 -119 bn
In $
bn
23.5
17.1
25.6
6.410.7
17.1
2020(E)
Transmission & SteeringSuspension & BrakingInteriorEngine & ExhaustElectronics & electricalBody & structural
Component wise
46.9
4.34.312.8
21.3
6.44.3
2020(E)
Construction EquipmentsFarm Equipments2 & 3 WheelersHCVLCVSCVPassengers cars
Category wise
Source: ACMA - EY Vision 2020
28
Vision 2020: Domestic market potential for Indian Component Manufacturer
Component category wiseOE vs. Aftermarket
4.0 6.1 10.318.0
42.9
69.7
0.0
20.0
40.0
60.0
80.0
100.0
2009 2015(E) 2020(E)
Aftermarket OE
In U
S $
bn
$ 22 bn
$ 49 bn
$ 76 - 84 bn
8.8017.04
25.266.39
12.63
4.40
8.52
14.74
2.20
4.26
6.32
6.39
8.42
6.39
12.63
2.20
2.202.20
0.00
20.00
40.00
60.00
80.00
100.00
2009 2015(E) 2020(E)
Body & structural Electronics & electricalEngine & Exhaust InteriorSuspension & Braking Transmission & Steering
$ 22 bn
$ 49 bn
$ 76 - 84 bn
In U
S $
bn
Source: ACMA - EY Vision 2020
29
Vision 2020: India’s Exports Potential
Geography wise Component wise
1.063.6
10.58
2.32
4.2
12.90
0.42
1.7
4.02
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2009 2015(E) 2020(E)
North America Western Europe Other markets
$ 3.8 bn
$ 9.4 bn
$ 26 - 29 bn
In $
bn
0.40 0.85 2.081.50
5.00
1.60
4.27
12.50
0.40
0.85
2.710.00
5.21
0.60
0.00
0.00
0.80
1.92
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2009 2015(E) 2020(E)
Body & structural Electronics & electricalEngine & Exhaust InteriorSuspension & Braking Transmission & Steering
In $
bn
$ 3.8 bn
$ 9.4 bn
$ 26 - 29 bn
Source: ACMA - EY Vision 2020
30
India’s Auto Component Exports potential to North America and Western Europe in 2020
Source: ACMA - EY Vision 2020
31
Auto Component Industry’s contribution to employmentgeneration and to India’s GDP
260 420590
660
1040
1470
0
500
1000
1500
2000
2500
2009 2015(E) 2020(E)
Direct Indirect
920
1,460
1,950 – 2,1601 to 1.2 million
additional jobs
2.10%
2.90%3.60%
0.00%
1.00%
2.00%
3.00%
4.00%
2009 2015(E) 2020(E)
Employment in Auto-Component industryAuto-Component industry contribution to GDP
‘000
per
son
s
Source: ACMA - EY Vision 2020
32
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
33
Indian Component Industry Development Capability
During the development process, Tata Motors asked suppliers to think out of the box and innovate products and process design.
This approach has resulted in 37 patents being filed to cover innovations in the car and has given Indian Engineers a canvas to showcase their skills and capabilities.
“Hyundai i20, Made in India with European Design feel”
Indigenization levels for high volume cars are at 80-90%
Hyundai exported 286K cars last year with a focus on Europe
34
Some Design & Research Centers in India
35
Challenges India is Committed to Address
Infrastructure Deficit
Talent Crunch
Scaling-Up the industry
Access to World-class Technology and Quality Practices
Remaining cost competitive
Access to and availability of cost-effective capital
Trade Policy
1
2
3
4
5
6
7
36
Capabilities of successful niche Component Manufacturers
Cor
e C
apab
iliti
es
Design, engineering & validation
Strong R&D focus on specific pdts./technology
Customized solution
Innovation management
Manufacturing
Domestic manufacturing footprints
Operating smaller plants efficiently
Sales & marketing
Customer acquisition
Customer loyalty management
Enab
ling
Cap
abili
ties IT systems focused mainly at product design and development
Raising risk capital
Cash flow management Managing risk of launching innovative products
Information technology, Capital management, Risk management
Innovative recruitment techniques to attract talent
Talent retention
People and organization
Source: ACMA - EY Vision 2020
37
Contents
Indian EconomyIndian Economy
Automotive IndustryAutomotive Industry
Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers
About ACMA About ACMA
Vision 2020Vision 2020
Auto Component Industry of IndiaAuto Component Industry of India
22
33
44
55
66
11
The Way ForwardThe Way Forward77
38
• Manufacturing
• Technology
• Research & Development
• Quality
• Environment
Areas of Cooperation
39
Areas of Cooperation
1. Global SMEs can invest in green-field manufacturing in India to meet growing domestic demand for auto-components.
2. Opportunities for Partnerships with Indian SMEs at Tier 2/3 level – the Next Wave - covering the entire automotive supply chain to address not only product technology, but also “Process Technology”.
3. Opportunity for supply base discovery.
4. Opportunity for Strategic Alliance to cover Global customers
5. Joint R&D with Indian companies for new product development and designing is also an attractive proposition.
40
The Addressable Opportunity…
• Establish Partners/JV in India for
- Engine & Exhaust parts
- Auto Electronics & Electrical
- Transmission & Steering
- Informatics & Telematics
- New Material
- Simulation Technology
• Collaboration for Manufacturing Excellence and Process Design
• Production Sharing in India & Europe for a Holistic Service Capability
• Partnering for Global Requirements
• Merger & Acquisition
41
Conclusion
• Vibrant Indian Economy
• Automotive Industry showing double digit growth in all segments
• India becoming Global and Regional hub or lead country for vehicle programmes
• Vision 2020
• Growing engineering and IT capability for manufacturing
• Auto Component Industry :Culturally compatible-Quality, Experience and Values
• Opportunity to partner in product & process innovation
India : A Gateway to GrowthIndia : A Gateway to Growth
42
ACMA Head OfficeThe Capital Court, 6th Floor, Olof Palme Marg, Munirka,
New Delhi – 110 067Tel: 011-26160315, 26175873, 74
Fax: 011-26160317E-mail: [email protected]
Website: www.acmainfo.com