Professional Documents
Culture Documents
The Indian Automotive Industry A Perspective
The Indian Automotive Industry A Perspective
A Perspective
1
• TATA Motors – Organisation Structure
• Emerging Opportunities
2
Organization Structure – TATA Motors
Senior Management Team
R N Tata
R N Tata
(Chairman – Tata Motors)
(Chairman – Tata Motors)
Ravi
RaviKant
Kant
(Managing Director)
(Managing Director)
P P Kadle
P P Kadle
A P Arya (ED – Finance &
A P Arya PPMMTelang
Telang
(ED – Finance &
Corporate Affairs)
(President – Heavy and Medium (President – Light and Corporate Affairs)
(President – Heavy and Medium (President – Light and
Commercial Vehicles
Commercial Vehicles Small Commercial
Small Commercial
Vehicles) Rajiv Dube
Vehicles) Rajiv Dube
(Sr Vice President – Passenger Engineering
(Sr Vice President – Passenger Engineering
Cars) Research Centre
Cars) Research Centre
3
• TATA Motors – Organisation Structure
• Emerging Opportunities
4
World Vehicle Production Trends (in '000s)
50000
40000
30000
20000
10000
0
1997 1998 1999 2000 2001 2002 2003 2004
Year
North America South America European Union Other Europe Japan Asia-other than Japan
Source : OICA.net
Data excludes 2-wheelers where Asia is not only the largest producer, but is also the largest market 5
State of the Global Automotive Industry
6
• TATA Motors – Organisation Structure
• Emerging Opportunities
7
INDIA : An Introduction
India USA
States : 28 50
(+ 7 Union Territories) (+14 dependent areas)
Sources:– IMF Data, The World Factbook, CIA Exchange Rate (PPP) : 1 USD = INR 10 (approximately)
8
Real GDP (USD Billion)
600
6.9% 586
After decades of 5.4% 548
500 indifferent
growth, India’s
economy is 473
accelerating in
400 the new 5.8%
millenium..
300
3.0% 279
200
3.2%
4.2% 159
100 118
86
60
0
1950 1960 1970 1980 1990 2000 2003 2004
Year
9
Per capita GDP (USD)
600
6.9%
Rapid increase in 3.6%
546
500 population in the
last fifty years 511
have negated the 466
impact of
400 economic growth 3.6%
in the past
0
1950 1960 1970 1980 1990 2000 2003 2004
Year
10
Indian Economy Goldman Sachs
already ranks 4th predicts India to
be the third
in the world in
largest economy
terms of GDP
in the world in
adjusted for
Purchasing Power absolute terms
Parity by 2025
GDP 10
RANK COUNTRY
(Purchasing Power Parity)
2005-10
2010-15
2015-20
2020-25
2025-30
2030-35
2035-40
2040-45
2045-50
11
India’s “Demographic Dividend”
Average Median Age (Years)
50.00
45.00 India has one of the
40.00 42.64 42.16 youngest population
38.99 38.85 amongst all nations
35.00 36.27
30.00 32.26
25.00 27.81 27.60
24.93 24.66 23.98
20.00
15.00
10.00
5.00
0.00
Japan Germany UK France USA China Brazil World Mexico India South
Africa
Source: The World Factbook, CIA Year
“Although it is the most populous country, because of Beijing’s long-standing one-child policy,
China’s working age population will begin to decline in the next 10 years. Meanwhile, India’s
youthfulness - 350 million citizens are under age 15 - ensures its workforce will expand for decades,
potentially enabling it to outstrip China’s economic pace through sheer weight of numbers.”
Time Magazine, Issue dated Dec 05, 2005
12
India has transitioned from a predominantly agrarian to a service-based economy in
line with the growth trajectory followed by major developed economies..
The Indian Economy is
Sectoral Share of GDP now more broad-based
and thus resilient..
100%
29.0%
33.5% 32.9% 36.0%
41.1%
48.5%
75% 51.4%
15.2%
20.7% 21.9%
25.9%
50%
%
24.9%
24.2%
24.5%
55.8%
25% 45.8% 45.2%
38.1%
34.0%
27.3% 24.0%
0%
1950 1960 1970 1980 1990 2000 2004
Sources:
Year
Statistical Outline of India 2004-05
Agriculture Industry Services
13
• TATA Motors – Organisation Structure
• Emerging Opportunities
14
Automobile production in India has doubled in 4 years, with growth seen across all
four major segments..
Automobile Production in India (Nos.)
7,000,000 374,414
203,697 989,560
1,000,000
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
15
In many ways, the Indian Automotive Market is unique
16
Personal Mobility is positively correlated to per capita GDP
17
India is expected to achieve mass motorization status in 2014
Inhabitants/Vehicle
100 ‘02
China in 2002
India 100
18
Key Challenges facing the industry
Increase in input prices Transition of Emission & Safety Regulations for Vehicles
Ferrous & Non-Ferrous Metals India
19
• TATA Motors – Organisation Structure
• Emerging Opportunities
20
2-Wheeler Production & Market Sub-Segments (Nos.)
CAGR – 15%
723,330
5,000,000 935,279
669,719 848,434
4,000,000
640,934 937,506
3,000,000
879,759 5,193,752
4,355,168
3,876,175
2,000,000
2,906,323
2,183,785
1,000,000
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
21
Indian 2-Wheeler Market
Competitive Scenario
- - 82% - - - 8% 10% -
22
The Indian 2-Wheeler Industry
Similarity with Global Industry • Large variety of products & choice for the customer
(9 manufacturers, 70+ Models)
23
Key Market Drivers Key Trends
Increasing disposable incomes
Eclipse of scooter segment
Executive
Low interest rates translating to low
financing and acquisition costs Performance
hence greater affordability.
24
• TATA Motors – Organisation Structure
• Emerging Opportunities
25
3-Wheeler Production (Nos.)
CAGR – 17%
300,000
250,000
200,000 374,414
356,223
150,000 276,719
203,234 212,748
100,000
50,000
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
Three Wheeler
26
Indian 3-Wheeler Market
Sub-segments and Competitive Scenario
Sub
Scooters
Segments India
27
The Indian 3-Wheeler Industry
28
Key Market Drivers Key Trends
“Last Mile” Transportation needs.
Goods segment growing at faster
29
• TATA Motors – Organisation Structure
• Emerging Opportunities
30
Passenger Vehicle Production & Market Sub-Segments (Nos.)
CAGR – 17%
181,778
1,000,000 60,673
146,325
800,000
51,441
0 63,751
114,479
600,000 127,519
105,667
960,505
782,562
400,000
513,415 557,410
500,301
200,000 (*)
0
2000-01 2001-02 2002-03 2003-04 2004-05
(*) MPVs were part of Passenger Car segment till 2000-01 Year
31
Indian Passenger Vehicle Market – Competitive Scenario
Passenger
Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% - <1% <1%
Utility
Vehicles 2% 18% 1% 42% 21% 1% 10% 1% <1% - 4% - <1%
Multi
Purpose 100% - - - - - - - - - - - <1%
Vehicles
32
The Indian Passenger vehicle Industry
Indian Passenger Vehicle Characteristics
Industry
Similarity with Global Industry • Multiple segmentation across & within major segments
• Cars (A, B, C, D & E segments) (Hatchbacks, Sedans, Notchbacks, Station
Wagons & Saloons)
• Utility Vehicles (Multi- & Sports Utility)
• Large variety of products & choice for the customer
(13 manufacturers, 50+ Models)
• Market dominated by Mini Cars & Hatchbacks (>80%)
• High incidence of taxes in Car Prices.
(24% Excise Duty, 12.5% VAT, Local Taxes as applicable)
• Customer preference driven by value for money and cost of
ownership considerations rather than image, performance and
Dis-similarity with Global power.
Industry (80% of cars sold are priced below USD 12000)
• Large proportion of chauffer driven cars. Rear Passenger comfort
is a critical influence in purchasing decisions.
• Emergence of strong domestic players (TATA, Mahindra).
• Strong demand pull for Utility vehicles from Private Taxi segment.
33
Passenger Car Penetration is low in India
Cars per thousand population
34
Key Market Drivers Key Trends
Increasing disposable incomes
Market evolution from Mini
Rising aspirational levels cars to Hatchbacks to
Compact Sedans now evident
Low interest rates.
Wide variety and easy
availability of Financing
options. Increasing customer emphasis
on aesthetics and comfort.
High sensitivity to Fuel prices
35
• TATA Motors – Organisation Structure
• Emerging Opportunities
36
Commercial Vehicle Production & Market Sub-Segments (Nos.)
CAGR – 22%
300,000
138,890
250,000
108,917
200,000
83,195
150,000
65,756
68,922
211,143
100,000 166,123
120,502
87,784 96,752
50,000
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
37
Indian Commercial Vehicle Market – Competitive Scenario
Medium &
Heavy CV - 64% 24% - 8% - 3% - <1% <1%
Trucks
Buses – L, M
& HCV 40% 30% 7% 5% 10% 6% 1% 1% -
Light & Small
Comm Veh – 59% <1% 32% 4% 3% 3% <1% - -
Trucks
38
The Indian CV Industry
Indian CV Characteristics
Industry
Indian CV Industry
Similar with Global • Cyclical 250
CV Industry
200
150
CAGR: 5%
Nosin'000
100
Dis-similar to • Secular long term growth trend
Global CV Industry 50
• Lower Power to Weight Ratios
• Early stage of road development 0
• Less degree of product
sophistication.
• Strong price entry barriers created
by domestic players
39
Key Market Drivers
Growth in Economic Activity
40
Indian CV Industry: Trucks
The growth of the Commercial vehicle industry is critically dependent on Infrastructure
development & economic activity
Impact of Road development Impact of GDP Growth.
Dramatic impact
1000 in initial stage of 1000 Gradual Stage
Stage
road development impact
900 900 Germany
Germany
800 800
France
700 700
MHCV / m population
UK France
Truck penetration
MHCV / m population
UK
Truck penetration
600 600
Turkey
Spain
500 4
4 500 Portugal Spain
Portugal
400 Australia
Russia 400
Argentina Argentina
300 Brazil 3 Brazil
300 Hungary 3
200 China
India (AL)
South Africa 2 200 Mexico
Romania China
100 Indonesia 1 South Africa 2
India 100 Indonesia
0 India
1
0 0.5 1 1.5 2 0
0 5 10 15 20 25
2004
2003 21%
NSEW 12%
Corridors
Completed
Feeder 15%
Roads 2005-07
52%
Source: CrisInfac, NHAI
43
• TATA Motors – Organisation Structure
• Emerging Opportunities
44
Automobile Component Business - India
(In USD Million)
CAGR – 22%
9,000
The growth rate in Auto Components 1,400
8,000 business has kept pace with OEM
growth
7,000
1,020
6,000
760
5,000
578
4,000 625 7,300
3,000 5,710
4,670
3,892
2,000 3,340
1,000
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
Domestic Export
45
Key Market Drivers Key Trends
Linked to growth of OEM Industry
India’s emergence as low cost
global sourcing destination.
Highly sensitive to input cost
escalation. Indian ancillary manufacturers are
shifting focus from global after-
Competitiveness driven by
market to global OEM supplies.
Manpower – Large pool of
qualified engineers & skilled Firms focus on operational
technicians at lower cost
excellence to improve quality &
Lower investment cost – Through
appropriate, low cost automation. reliability of products.
(8 Deming Award winners)
46
The Indian Auto component industry is now transitioning from
being a supplier for the global aftermarket to becoming a full-
scale global Tier 1 supplier
Path
i t i on
r ans
T
Hand Tools
Metal bonded &
Low
47
Indian Component suppliers are adopting different approaches
for Global expansion & growth
Suppliers of:
• Castings
• Forgings
• Machined Items
Greenfield Overseas Locations
• Rubber Items
• Wheel Rims Sundaram Fasteners: China
Minda Group: Indonesia Overseas Acquisitions
Bharat Forge
(CDP-Germany; Federal Forge-
USA)
Sundaram Fasteners
(Cramlington Precision, UK;
Peiner-Germany)
48
• TATA Motors – Organisation Structure
• Emerging Opportunities
49
Automobile Exports from India (Nos.) CAGR
Overall – 22%
Passenger Veh – 57%
2-Wheelers – 35%
700,000
International Business
29,949
growth presents a huge
600,000 opportunity, as well as
a challenge for the
Indian Automotive 166,413
17,432
500,000 Industry
129,291 66,801
400,000
12,255
68,144
300,000
72,005
11,870 43,366
200,000 13,770 366,724
27,112 53,165
265,052
16,263 15,462
100,000 179,682
111,138 104,183
0
2000-01 2001-02 2002-03 2003-04 2004-05
Year
50
Opportunities for the industry are emerging both in the areas of Automotive
Manufacturing and Engineering Services
Manufacturing: Engineering Services:
51
Thank You
52