Download - Automobile 2006
AutomotiveSeptember 2006
www.imacs.in
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• Market Overview
• Government regulations & policy
• India Advantage
and business opportunities
Contents
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Market Overview• Market Overview
• Government regulations & policy
• India Advantage and business opportunities
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Profile: Indian Automotive Industry
Vehicle sales in India in 2005 - 06 ( in mil)
1.14
0.35
7.05
0.36
0 2 4 6 8
Cars CVs Two wheelers Three Wheelers
• The industry has grown at a CAGR of 14% p.a over the last 5 years, with sales of 9 million vehicles in 2005-06
• 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 7th largest market by
2016
• The industry has emerged as a key contributor to the Indian economy
Source : SIAM
Size of around US$ 34 billion
in 2006
Market Overview
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Auto components industry has also grown at a rapid pace ...
Size of Component Industry (US$ mn)
3849 39654470
5430
6730
8700
10000
FY00 FY01 FY02 FY03 FY04 FY05 FY 06
17%
• The Indian auto components industry has grown at 17% CAGR over the last few years to reach a size of around US$ 10 billion in 2005-06
• Market breakup: OEM demand ~ 54%, replacement market ~30%, exports ~16%
Source : ACMA
FY refers to Financial Year – April to March
Market Overview
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Players: Indian auto industry
Global OEM
Indian OEM
Indian Suppliers
Global Suppliers
Engineering &
Development Companies
Indian Auto
Industry
• GM • Toyota • Ford • Hyundai• Maruti Suzuki • Honda• Skoda• Volvo• Mercedes
• Tata Motors• Mahindra & Mahindra• Bajaj Auto• TVS Motors• Hero Honda• Bajaj Tempo• Ashok Leyland
• Bharat Forge• Sundram Fasteners• Rane Group• Shriram Pistons• RICO Auto• Sono Koyo Steering
• Delphi• Visteon• Bosch• Denso• Valeo• Thyssen Krupp
The Indian auto industry is highly competitive with a number of global and Indian auto companies present
Market Overview
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Delhi-Gurgaon-Noida-Ghaziabad
Kolkata
Mumbai-Pune-NasikAurangabad
Jamshedpur
Chennai Bangalore Hosur
Rajkot-Halol
Hyderabad
Ludhiana
Haridwar
Pitampur
Automotive clusters in India
Ashok Leyland EnfieldFord
Greaves Hindustan Motors HyundaiMahindra & Mahindra Tatra Toyota Kirloskar TVS MotorsVolvo
Ashok Leyland EicherForce Motors Hero HondaHindustan Motors HondaHonda SIEL ICMLKinetic LMLMajestic Maruti
SuzukiPiaggio YamahaSwaraj Mazda Tata Motors
North / Central
Ashok Leyland Atul AutoBajaj Auto Daimler
ChryslerFIAT Force
Motors GM Greaves KineticM & M PremierSkoda Tata
Motors
WestHindustan MotorsTata Motors
East
South
Source: SIAM, IMaCS analysis
Major automotive clusters - Mumbai-Pune-Nasik-Aurangabad (West), Chennai -Bangalore-Hosur (South) and Delhi-Gurgaon-Faridabad (North)
Market Overview
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Exports are rising - India has the potential to become the global outsourcing hub
Vehicle Exports from India
0
100000
200000
300000
400000
500000
600000
CV Cars 2 Wheelers 3 Wheelers
Units
0
10
20
30
40
50
60
%
Exports (2005-06) Growth rate ( 4 year CAGR)
Indian vehicle exports have grown at a scorching rate of over 40 % over the last few years, while component exports have grown at around 25 % per annum. Key exporters include:
• Maruti, Tata Motors, M & M and Hyundai for Passenger Cars and MUVs• Tata Motors and Ashok Leyland for LCV / M & HCVs
• Bajaj, TVS Motors and Hero Honda for 2 wheelers
Export of auto components
(USD million )
456 625 578 760
1,800
10201400
FY00 FY01 FY02 FY03 FY04 FY05 FY06
25%
Market Overview
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Growth drivers for theIndian automotive industry
Contemporary products
Shorter life cycle
Growth in Income levels
Easier financing
Government Policies
New productlaunches
Indian Automotive Industry
Increasing consumer
demand
Cost Competitiveness
Overall economic growth
Lower duties & taxes
Export Competitiveness
Reduced cost to consumer
India emerging as a manufacturing hub
Market Overview
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Growth potential of theIndian automotive industry Potential Vehicle sales in India in 2015 - 06 ( in mn)
2.65
0.64
27.8
0.87
0 10 20 30
2015-16
Cars CVs Two wheelers Three Wheelers
• The size of the Indian automotive industry is expected to grow at 13% p.a over the next decade to reach around USD 120 - 159 bn by 2016.
• The total investments required to support the growth is estimated at around USD 35 - 40 bn
0 5 10 15 20 25
ComponentsExports
DomesticComponents
$ Billion
USD 20 - 25 bn
USD 13 - 15 bn
• The Indian auto component industry is well positioned to capitalise on the growth in outsourcing to low cost countries
• Exports would lead the growth in the component industry, which is expected to be around USD 33- 40 bn by 2015
Projected size of Auto Components industry - 2015
Source: AMP Vision, ACMA Vision
Market Overview
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Government regulations and policy• Market Overview
• Government regulations & policy
• India Advantage and business opportunities
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Policies relating to the 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 upto 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 upto 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 harmonising the regulatory standards with the rest of the world
Government regulations & policy
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Automotive regulations in IndiaIndian automotive regulations are closely aligned to the ECE regulations. The table below shows the level of alignment of the Indian regulations with the ECE regulations
Status of Indian Regulation
Number of regulations
Fully / Partially aligned 43
In process of being aligned 32
Items / Regulations to be covered 39
Total 114
Source: IMaCS Analysis
The key regulations that are likely to impact the auto industry in the future are:
• Crash Related Regulations• Introduction of Bharat Stage IV norms
Government regulations & policy
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Trends in future regulations – Safety and Emission related
2009
2008
2006
2004200
7200
52010
• Crash requirements aligned with EU
• Mandatory Airbags
• Bharat Stage IV in Metros and Bharat Stage III in rest of the country
• India is expected to align its crash requirements and emission standards with European standards in the 2008 / 09 timeframe
• Presently Bharat Stage III ( Equivalent to Euro III) is mandated in Metros and other large cities and Bharat Stage II ( Equivalent to Euro II) for the rest of the country
• Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced in the large Indian metros around 2009 and Bharat Stage III in the rest of the country
Approach
• Harmonization with ECE standards
• Homologation and Certification testing agencies and centres
Regulation Road Map Targets• Industry challenges to development• Better vehicles: safer and more
environment friendly
Government regulations & policy
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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 Infrastructure Project (NATRIP) to support the growth of the auto industry in India
• NATRIP envisages setting up of five independent and up gradation of existing test centres
• Testing centres at Manesar (Haryana), Chennai (Tamil Nadu), Pune (Maharashtra)
• Proving ground at Indore (MP)
• Tractor testing facility at Rae Bareilly (UP)
• Hill Driving Training Centre at Silchar
(Assam)
New testing & homologation
center at MANESAR
Up-gradation of VRDE at
AHMEDNAGAR
Up-gradation of ARAI at
PUNE
New testing center for tractors & off-
road vehicles, accident data analysis and
specialised driving training at RAE
BAREILLY
New test & homologation center near CHENNAI
New complete proving ground
at INDORE
Hill Area driving training
center and Regional In-Use
vehicle management
center at SILCHAR
Government regulations & policy
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India Advantage and business opportunities• Market Overview
• Government regulations & policy
• India Advantage and business opportunities
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Attractiveness of the Indian automotive industry
Large and growing domestic demand• Demand growth expected to be around
10 % CAGR making India one of the fastest growing markets
Proven product Development capabilities
• Capabilities to develop complete vehicles and systems
• More than 125 Fortune 500 (including large auto companies) have R&D centres in India
• Companies can leverage India’s acknowledged leadership in the IT industry
Stable economic policies• Continuity in reforms and
policies• India targets to emerge as the
“manufacturing hub” for small cars
Competitive manufacturing cost •Implementation of VAT, has positioned India as one of the leading low cost manufacturing sources
High quality standards• 12 Indian component
manufacturers have won the Deming Prize for quality
• Most leading component manufacturers are QS and ISO certified
Export Potential • Increased outsourcing has led
to a large potential to export components and vehicles to other markets
Indian Auto
Industry
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Opportunities in the Indian automotive sector
• Participate in domestic
growth opportunities• Exports of vehicles• Exports of components• Engineering and Design
Services
Indian
Automotive
Sector
Domestic Opportunities Global outsourcing Opportunities
• Potential investors can capitalise on opportunities both in the domestic and export oriented segments
• Investment potential of upto USD 35 - 40 bn in this sector over the next 10 years
• Investments in the Indian automotive industry can be in various forms• 100 % subsidiary - 100 % FDI through automatic route allowed in this sector • JVs with local firms• Technology support or sharing agreements
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Key players in the Indian auto industry - Passenger Cars and CVs
The largest player in the Indian industry. Plans to launch new and excitingproducts in the Indian markets, including the ‘100,000’ car
Suzuki’s JV in India and the largest passenger car manufacturer in India
The third largest passenger car manufacturer in India and one of the largest exporters of vehicles. Has established India as one of its manufacturingbases in the world. Is planning to invest heavily to boost exports from India
Has vision of capturing 10 % share of the Indian passenger car market by 2010
One of the leading players in the Indian premium cars segment
One of the leading players in the Indian premium cars segment
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Key players in the Indian auto industry - Passenger Cars and CVs
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
Other global players who are in India / have plans for India include -Volvo, Daimler Chrysler, BMW and Nissan Motors
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Key players in the Indian auto industry - Two wheelers
The largest 2 wheeler manufacturer in the world
The 2nd largest 2- wheeler manufacturer in India and the largest 3 wheeler manufacturer. Has plans for establishing a manufacturingfacility 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
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