Auto Component Sector

Sector Contents
Industry Overview

The Indian auto component industry has been navigating through a period of rapid changes with great
élan. Driven by global competition and the recent shift in focus of global automobile manufacturers,
business rules are changing and liberalisation has had sweeping ramifications for the industry. The global
auto components industry is estimated at US$1.2 trillion. The Indian auto component sector has been
growing at 20% per annum since 2000 and is projected to maintain the high‐growth phase of 15‐20% till
2015.

The Indian auto component industry is one of the few sectors in the economy that has a distinct global
competitive advantage in terms of cost and quality. The value in sourcing auto components from India
includes low labour cost, raw material availability, technically skilled manpower and quality assurance. An
average cost reduction of nearly 25‐30% has attracted several global automobile manufacturers to set
base since 1991. India’s process engineering skills, applied to re‐designing of production processes, have
enabled reduction in manufacturing costs of components. Today, India has become the outsourcing hub
for several global automobile manufacturers.

Innovation and cost pruning hold the key to meeting the global challenge of rising demand from
developed countries and competition from other emerging economies. Several large Indian auto
component manufacturers are already gearing to this new reality and are in the process of substantially
investing in capacity expansion, establishing partnerships in India and abroad, acquiring companies
overseas and setting up greenfield ventures, R&D facilities and design capabilities.

Some leading manufacturers of auto components in India include Motor Industries Company of India,
Bharat Forge, Sundaram Fasteners, Wheels India, Amtek Auto, Motherson Sumi, Rico Auto and Subros.
These companies are in the process of making a mark on the global arena, and some have already
acquired assets abroad.

The Indian automobile components industry today is one of fastest growing sectors of the country and a
globally competitive one. India Auto Component is US$ 22 billion and expected to swell to US$ 40 billion
by 2016 (Global market estimates US$ 1.9 trillion) with exports of US$ 20 billion. Estimates for the Indian
auto components industry are pegged at US$ 113 billion for the year 2020. The major importers are US
(36%) and Europe (26%). India's component industry now manufactures the entire range of auto-
components: parts of engine, transmission, suspension, braking, electrical, chassis, etc.

India is expected to become one of the top five auto component economies by 2025. The industry has
been experiencing a high growth rate of 20 per cent for some years and this is likely to grow further. The
exports growth rate has been consistently higher and is expected to touch 34%. Big brands like GM and
Ford are happily using Indian made components in their vehicles including critical ones. Over 35 OEMs
have set up their International Purchase Offices (IPOs) in India to procure the needed components in an
efficient manner. These include firms like General Motors, Ford, Cummins, Bosch, Volkswagen, BMW, MAN
and JCB amongst others. Auto components exports are Engine parts (31%), Drive transmission and
steering parts (19%),Body and chassis (12%), Suspension and braking parts (12%), Equipment (10%),
Electrical parts (9%) and others(7%). MICO, Bharat Forge, Sundaram Fasteners, Wheels India, Amtek
Auto, Rico Auto etc. find place amongst top companies of India. Some of these companies have already
acquired assets abroad for future expansion plans. The exports composition in terms of the proportion of
OEM and aftermarket underwent a sea change in last twenty years: OEM 35 % in the 1990s to 75% in
2009. While exports have been booming, there has been a sharp rise in imports of auto components as
well, which speaks of a healthy two way economy, homogenization and mutual trust.
Vehicle Production in India (000)

Particulars 2009 2015E 2020E

Passengers Vehicles 2200 5100 9200
SCVs 150 670 1160
LCVs 120 360 500
M&HCVs 200 390 570
TWO & Three wheelers 10230 22100 31750
Tractors 420 710 995
Construction Equipment 40 100 180

Market Share Segment Wise

Market Share in 2015E Market Share in 2020E

INDIA: A Global Hub for Compact CARs (A New Plant Addition in last one Year)

Company Capacity (000) Investment (USD $ Mn)

Maruti 250 380

Hyundai 600 1000

Tata Motors 500 240

Toyota 200 310

Ford 200 500

General Motors 140 650

Nissan-Renault 400 1000

VW 110 750

Honda 60 250
Automobile Production in India : Segment-Wise

Car Production in India

LCVs Production in India

MUVs Production in India

M&HCVs Production in India

Tractors Production in India

Scooters Production in India

Motorcycles Production in India

Mopeds Production in India

8 Yrs CAGR: 9.1%

Three Wheelers Production in India

Economy of India

Real GDP Growth India v/s World

Composition of GDP

Import & Import Growth

Export & Export Growth

FDI & Growth

FE Reserve & Growth

CAGR:
Exchange Rate (Rs v/s USD) & Growth (%)

Import Tariff

Auto Components Industry

Turnover Snapshot (USD $ bn)

2010-
Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 11E
Turnover 8.7 12 15 18 18.4 22 26
Growth Rate (%) 29 37.9 25.0 20.0 2.2 19.6 18.2
Exports 1.69 2.47 2.67 3.52 3.8 3.8 5
Growth Rate (%) 34 46.2 8.1 31.8 8.0 0.0 31.6
Imports 1.9 2.48 3.6 5.22 6.8 8.16 0
Growth Rate (%) 33 30.5 45.2 45.0 30.3 20.0 0.0
Investment 3.75 4.4 5.4 7.2 7.3 9 12
Growth Rate (%) 21 17.3 22.7 33.3 1.4 23.3 33.3
Export as % of T/O 19 21 18 20 21 17 19
Import as % of T/O 22 21 24 29 37 37 0

Industry Size

Composition of Products (%)

Auto Components Industry: Export (USD $bn) & Export Growth (%)

Region-Wise Export (%) Profile of Export Market (%)

Import & Import Growth (%) Region – Wise Import

Investment (USD $bn) & Investment Growth (%)

VISION 2020

Domestic Auto Components Demand

Component Wise Demand (%)

Category Wise Demand (%)

OEM v/s Aftermarket

Component Market Category wise (USD $bn)

Region wise Export Potential (USD $bn)

Particulars 2009 2015E 2020E

North America 1.1 3.6 10.6
Western Europe 2.3 4.2 12.9
Other Markets 0.4 1.7 4.0
Total 3.8 9.5 27.5

Component Wise Export

Contribution to Employment Generation (000)

Contribution to GDP