AUTOMOBILE

INDUSTRY

AMIT SINGH
 AUTOMOBILE INDUSTRY
OVERVIEW
• An annual contribution of 4% to the GDP and accounting for
about 5% of the total industrial output, this segment clearly
stands out as a significant contributor to the economic
growth. The industry has grown at a CAGR of 16% p.a over
the last 5 years.

• With the potential to emerge as one of the largest in the

world. Presently, India is
• 2nd largest two wheeler market in the world
• 4th largest commercial vehicle market in the world
• 11th largest passenger car in the world and is expected to
be the 7 largest market by 2016
th

• The industry has emerged as a key contributor to the Indian

economy
 OVER 9.9 MILLION VEHICLES ARE BEING PRODUCED BY
INDIA
- 1.3 million passenger cars and about 400 000 commercial
vehicles
VEHICLE MANUFACTURERS

Commercial Vehicles Passenger Vehicles

Tractors2 – wheelers3 – wheelers
(400 000 veh.) (1 308 913 ) (296 000
7600801 veh.)
(434 424)

 8
 13 manufacturer
 8  6
manufacturer manufactur
s manufactur
s ers
LCV’s M&HCV’s & Buses  Suzuki
 Escorts  Hero
ers
(171 781 (219
.) 297 veh.)  Tata  M&M Hond
a
 Bajaj
 Hyundai  L&T  Piaggi
 7  7  Bajaj o
 Mahindr  Punjab
manufactur manufacture a  TVS
Tractors  Yama  Mahin
ers rs  Toyota dra
Honda
 New ha
 Tata  Tata 
 Force
 GM Holland  LML
 Ashok  Ashok Hond  Atul
 Ford  ITL – 
Leylan Leyland a Auto
 HM/ Renault
d  Eicher  Kineti
Mitsubis  John-  Scoot
Mahind c
  Swaraj hi Deere ers
ra  Royal
Mazda  Skoda India
Force
 Steyr Enfiel
 Eicher  Volvo

d
 Force  Fiat
 Tatra  Mercede
 Swaraj s
Policies relating to the Auto
sector: Auto Policy
• In 2002, the Indian government formulated an auto
policy that aimed at promoting integrated, phased,
enduring and self-sustained growth of the Indian
automotive industry.

• Allows automatic approval for foreign equity

investment up to 100%
in the automotive sector and does not lay down any
minimum investment criteria.

• lays emphasis on R & D activities carried out by

companies in India

• Weighted tax deduction of up to 150% for in-house

research and R & D activities.

• Formulation of an appropriate auto fuel policy to ensure

availability of adequate amount of appropriate fuel to
meet emission norms

• Confirms the government’s intention on harmonizing the

 State-of-the-art test
facilities will support the
growth of the auto industry
• The Government of India is
promoting National
Automotive Testing and R&D New testing &
Infrastructure Project homologation
center at MANESAR

(NATRIP) to support the New testing

New testing center
homologation
& Hill Area driving
training center
for tractors & off-
growth of the auto industry in center
road at MANESAR
vehicles,
accident data
and Regional In-
Use vehicle
analysis and management
India specialised driving center at
SILCHAR
training at RAE
BAREILLY

• NATRIP envisages setting up Up-gradation of

VRDE at
of five independent and up AHMEDNAGAR
New complete
gradation of existing test Up-gradation of
proving ground
at INDORE
ARAI at PUNE
centres
• Testing centres at
New test &
homologation
center near

Manesar (Haryana), CHENNAI

Chennai (Tamil Nadu),

Pune (Maharashtra)
• Proving ground at Indore
(MP)
Indian Automotive Industry

Government of India
SIAM
ACMA

Automotive
Mission Plan
2016

On 29.01.07, the Prime Minister

released Automobile Plan 2006 -2016
to give a road map to Indian
Automobile Industry

Increase turnover to
Increase export revenue Provide employment to
$145 billion by 2016
to $ 35 billion by 2016 fromadditional 25 million people
from $ 35 billion
$ 4.1 billion at present by 2016
at present

By 2016, the Automotive sector is expected to contribute

10% of the country’s GDP and 30~35% of the Industry
7
Automotive Components Industry
Automotive
Mission Plan
2016

ACMA VISION 20:20:1

Achieve $20 billion in Domestic Sales

20

Achieve $20 billion in Exports Sales

20:20:1 20
VISION
20:20:1
Create 1 million additional Jobs
1

8
India Advantage
and business Attractiveness of the Indian Export Potential

opportunities
Large and growing domestic
demand
automotive industry • Increased outsourcing has
led to
a large potential to export
• Demand
Proven product
growth Development
expected to be components and vehicles
capabilities
around to other markets
High quality
• Capabilities
10 % CAGR making Indiacomplete
to develop one of the
standards
fastest growing
vehicles markets
and systems
• 12 Indian component
• More than 125 Fortune 500 manufacturers have
(including large auto companies) won the Deming Prize
have R&D centres in India for quality
• Companies can leverage India’s • Most leading
acknowledged leadership in the IT component
industry manufacturers are QS
and ISO certified

Indian Competitive
Auto manufacturing cost
Industry •Implementation of VAT,
Stable economic policies has positioned India as
• Continuity in reforms and one of the leading low
policies cost manufacturing
• India targets to emerge as sources
the “manufacturing hub”
for small cars
Indian Automotive Industry - Growth
Drivers

Higher GDP growth

India’s huge geographic spread

Increasing Road Development, Golden Quadrilateral

Increasing disposable income with the service sector

Easier finance schemes

Replacement of aging four wheelers

Graduating from Two wheeler to Four wheeler

Increasing dispensable income of rural agri sector

Growing Concept of Second Vehicle in Urban Areas

Two wheeler story could be repeated in the car segment

10
 8 out of top 10 global
companies have India presence

They contribute 60 % of global

production
but
25 % of India Production
 The Motorization Process
Cars for 1.000 inhabitants in different countries

750

600
2006
USA 813
I taly 673
450
Germany 597
France 595
J apan 593
300 UK 571
Poland 385
S.Korea 322
150 Brasil 124
China 23
I ndia 12

12 1960 1970 1980 1990 2000 2010

 GROWTH ASPECTS
• India has a low vehicle presence (with passenger car
stock of only around 14 per 1,000 population in 2008),
and so possesses substantial potential for growth.

• Passenger car production in India is projected to cross

three million units in 2014-15.

• Sales of passenger cars during 2008-09 to 2015-16

are expected to grow at a CAGR of around10%.

• Export of passenger cars is anticipated to rise more

than the domestic sales during 2008-09 to2015-16.

• Motorcycle sales will perform positively in future,

exceeding 10 million units by 2012-13.

• Value of auto component exports is likely to attain a

double digit figure in 2012-13.
Key players in the Indian auto
industry - Passenger Cars and
Commercial vehicles

The largest player in the Indian industry. Plans to launch new and ex
products in the Indian markets, including the ‘100,000’ car

Suzuki’s JV in India and the largest passenger car manufacturer in Ind

The third largest passenger car manufacturer in India and one of the
largest exporters of vehicles. Has established India as one of its man
bases in the world. Is planning to invest heavily to boost exports from

Has vision of capturing 10 % share of the Indian passenger car marke

2010

One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment

 One of the leading players in the Indian
premium cars segment.
Plans to enter the small car segment by re-
launching the Matiz

One of the largest players in the UV / MUV segment

The 2nd largest CV manufacturer in India

Key players in the Indian auto
industry - Two wheelers

The largest 2 wheeler manufacturer in the world and 1st in I

The 2nd largest 2- wheeler manufacturer in India and

the largest
3 wheeler manufacturer. Has plans for establishing a
manufacturing facility in Indonesia .
The third largest 2 wheeler manufacturer in India. Has plans
for establishing a manufacturing facility in Indonesia

Has recently entered the Indian market through its direct

subsidiary
( in addition to its JV – Hero Honda)
Has recently entered the Indian market through its direct
subsidiary
PAST PERFORMANCES & CURRENT
TRENDS
Market share trends : 2003-04 to 2006-07
Medium & heavy commercial vehicles

Company 03-04 04-05 05-06 06-

TATA Motors 63.26 63.90 60.55 07
60.24
Ashok Leyland 31.58 26.85 30.12 32.03
Eicher motors 4.62 6.69 6.27 5.62
Swaraj Mazda 1.20 2.31 2.50 1.70
Man force Trucks -- -- -- 0.08
Asian Motor works -- -- 0.03 0.02
• Light commercial vehicles

Company 03-04 04- 05-06 06-07

TATA Motors 48.05 05
52.36 61.82 64.22
Mahindra & Mahindra 32.26 33.31 26.41 26.75
Eicher Motors 6.25 5.86 4.85 4.25
Swaraj Mazda 6.40 5.31 3.37 2.47
Force Motors 6.41 2.66 2.68 2.03
Ashok Leyland 0.62 0.50 0.85 0.26
• Passenger cars

Company 03-04 04-05 05-06 06-07

Maruti Suzuki 42.99 39.77 40.24 38.47
Hyundai 22.80 22.21 23.05 22.27
TATA 14.38 14.95 15.10 14.35
Honda 6.30 8.09 8.58 11.12
Ford 4.57 4.38 4.51 5.76
GM 3.67 5.37 5.22 4.95
Benz 1.39 1.60 1.45 1.54
Hindustan Motors 2.54 2.57 1.83 1.43
• MUVs

Company 03-04 04-05 05-06 06-07

Mahindra & Mahindra 38.61 39.25 42.50 38.78
TATA 19.83 21.09 22.29 25.27
Force Motors 4.10 4.27 4.26 4.36
Maruti Suzuki 1.91 1.98 1.55 1.05
Hindustan Motors 0.85 0.17 0.15 0.59
Toyota Kirloskar 33.71 32.44 29.26 29.96
• MOTORCYCLES

Company 03-04 04-05 05-06 06-07

Hero Honda 48.80 52.16 50.80 48.48
Bajaj 24.03 27.98 32.31 34.72
TVS 14.64 11.69 10.86 11.17
Yamaha 6.24 4.88 3.98 3.94
• THREE WHEELERS

Company 03-04 04-05 05-06 06-07

Bajaj 61.08 48.77 48.80 54.74
Piaggio 10.01 24.73 28.36 24.97
Mahindra & Mahindra 10.46 11.14 8.89 9.97
Scooters India 5.74 4.10 4.14 4.19
Atul Auto 2.83 3.26 3.57 2.87
Force Motors 7.17 5.87 4.55 2.73
 EXPANSION PLANS
• Maruti Suzuki :
• New car plant to make 250,000 cars per annum (total 800,000 cars/annum)
• 10 new Component JVs to support new Diesel Engine Plant.
• Hyundai :
• Increase capacity to 400,000 cars per annum over next 1 year.
• Nissan
• Team up with Mahindra & Mahindra and Renault to invest in a $905 million
car project in India, capacity to produce 400,000 units in seven years.
• Tata Motors :
• New plant to manufacture 100K car in West Bengal with an investment of US
$ 0.24 Billion.
• Toyota :
• Target of 200,000 units capacity by 2010.
• General Motors :
• New Capacity to manufacture more small car like spark.
– Nissan
– Compact SUV
 Very Competitive Market
• From 20 models available in year
1995 to 93 available today (Not
counting the variants)

• 60 new launches done in 2008

Recent Newsmakers
The $ 2,500 Car (The
NANO)
Vehicle Production

Car & MUV production - Apr - Sep

1000000
900000
14%
800000 18% growth
700000 7% growth
growt
600000 28%
500000 growt
Nos

29%
growt
400000 -4% 2%
300000
200000
100000
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Catg I Catg II Catg III Catg IV Catg V MUV Total

Growth over previous period

growth

27
 Current trend
• AUTOMOBILE SALES ALL TIME LOW: declined by
18.2 % in December 2008.
• THE TOTAL VECHICLE SALES IN DOMESTIC
MARKET STOOD AT 5,97,622 (DEC 2008) WHERE
AS IN PREVIOUS YEAR IT WAS 7,30,603 (DEC
2007).
• VARIOUS AUTOMOBILE COMPANIES SHUT THEIR
PLANT TEMPORARILY BECAUSE OF DEMAND NOT
MEETING THE TOTAL PRODUCTION.
• THE CUT IN EXCISE RATE (4%) ITS BENEFIT WAS
DIRECTLY PASSED TO CUSTOMER.
• ALL MAJOR COMPANIES REDUCED THE PRICES OF
VECHICLES TO INCREASE DEMAND.
• IN BAILOUT PACKAGE OF JANUARY GOVT
INSTRUCTED GOVT. BANKS TO PROVIDE CREDIT
TO NBFC’S (NON BANKING FINANCIAL
 Current Scenario
• Nov-2008
• Automobile industry reported one of
its worst performance
• Decline in sale of commercial
vehicles by 48% & production by
57.3%
• Sale of 2 wheelers fell by 9.2%
• Sales of passenger cars & muvs fell
by 8.2%
 SWOT Analysis
Strengths

• Automobile industry is an established and an

evergreen industry.

• India is the strongest player in the small car segment

of the global automobile market

• Indian companies are the best cost innovators

• The automotive industry has long been known for its

development and promulgation of the assembly-line.
• Some of the greatest developments in the
automotive supply chain lie in the development of
Just-In-Time (JIT) inventory methods.

• Through the use of advanced technologies,

assembly line manufacturing, and JIT inventory
management, the automotive industry has been
able to achieve significant gains in productivity.
 Weakness

• Indian is lacking in proper

infrastructure.

• This is slowing the pace of growth of

auto industry

• Companies are not improving after

sale services
 Opportunities
• The automotive ecosystem is in the midst of
significant change, with increasing challenges in
consumer demands, technology development, and
globalization.
• While demand for incumbent technologies will remain
strong, alternative power trains could capture more
than 20 percent of the global market by 2020,
depending upon boundary conditions such as fuel
taxation and emissions regulation set by governments
as well as oil price development.
• storage is in the heart of the next generation of efforts
for fuel economy.
• More realistic scenario will emerge for technologies
using Hydrogen as automotive fuel.
• Intelligent use of NCES (Non conventional energy
sources) for powering Public Transport.
 Threats

• Global Crisis

• Companies not focusing on R & D

are under great risk

• High competition from foreign

players
 SCOPE IN THIS INDUSTRY
• It comes under manufacturing
industry.
• We can join there in sales &
marketing, H.R, Finance, supply
chain mgt ,R&D as well as in
operations department .
• Good job opportunity is there.
• Pay package is also very good .
 Critical Analysis
• Automobile Industry in India is still in its developing
stage.
• The industry would have to develop vehicles which
would have minimum impact on Air Quality and
confirm to the Safety Norms with cost of fuel
increasing rapidly.
• The Industry would also need to provide energy
solutions for economic activities to sustain.
• When we compare 2020 with the present, we cannot
think about the growth of the automobile enterprise
without also paying attention to the safeguarding of
the world environment.
• In the next ten years, we will experience more
change than in the 50 years before.
• The industry would not only need to address the
technology challenges but also look at cost
competitiveness and human resources challenges.

• The policy makers would have to provide

infrastructure to absorb the volumes that are
expected to come into existence.

• Challenges beyond 2016 would make it necessary for

Private & Public Sector to join hands and come out
with effective solutions for sustainable mobility
 Sources
• Society of Indian Automobile
Manufacturers (SIAM)
• CMIE REPORT
• INDIAN BRAND EQUITY FOUNDATION
• AUTO CAR INDIA : ECONOMIC TIMES
• GOOGLE
• BUSINESS WORLD
• TIMES OF INDIA
• BUSINESS LINE
• ECONOMIC TIMES
 Thank You

JAN 19 39