Indian automobile industry, growth, challenges, opportunities
Text of Indian automobile industry growth, challenges, opportunities
Indian Automobile Industry Growth, Challenges & Opportunities Shailendra Tomar
Agenda Automotive Clusters in India Market Share of Passenger Vehicles Passenger Vehicles Production Major Developments & Investments India will drive production growth Strong future in B segment Indias Demographic Dividend Export Hub Supplier Footprints Auto Component Challenges in India Government Initiatives Opportunities for Global Leverage Key Automotive Trends Expected changes and barriers
Automotive Clusters in India Indias automotive endowment is located in four major industrial areas spread across the country
Market Share of Passenger Vehicles Models Dec 2013 Alto 23,823 Swift 16,788 Dzire 15,427 Wagon R 12,154 Grand i10 9,077 Bolero 8,465 Omni 5,590 Eon 5,428 Ertiga 4,924 Innova 4,918 Source: SIAM Reports Dec 2013
Passenger Vehicles Production The passenger vehicles production in India touched 3.23 million units in 201213 and is expected to reach 10 million units by 202021 The industry is estimated to grow at a CAGR of 13 per cent during 20122021 The industry recorded exports worth US$ 9.3 billion in 201213 and is projected to touch US$ 30 billion by 202021 Figures for Financial Year April to March (*Estimates)
Major Developments & Investments Tata Motors Ltd plans to invest about 30 million in the National Automotive Innovation Campus (NAIC) for research and development (R&D). Volvo India plans to set up truck and bus manufacturing facility in Malur, Karnataka, with an investment of US$ 158.32 million. JBM Auto has formed a joint venture (JV) with BredaMenarinibus to manufacture luxury buses in India. They will set up a plant near Faridabad, Haryana, with at an investment of US$ 81.2 Mahindra will develop the world's first hybrid technology that can be deployed in vehicles with manual transmission and enhance fuel efficiency by ~20%. Jaguar Land Rover (JLR) will build a manufacturing plant in Rio de Janeiro, Brazil with an investment of US$ 751.95 million. Amtek Auto has signed an agreement to buy Kuepper Group, Germany for about 200 million in its second big European acquisition in 2013. Honda Cars India will use the Ennore Port to export cars to South Africa. The infrastructure for car exports at Ennore Port is attractive and cost effective.
With regards to the Asian scope, China and India will drive production growth
Indian automotive market will enjoy strong growth in all segment B segment overperform Production evolution by segment [PC + LCV ;m vehicles] CAGR (10-15) 19,8% 11,5% 5,4% 11,3% 12,6% 16,6% 14,0% 33% LCV A B C D E+ MPV/SUV Value [Bn] 22,91 12% 32% 21% 10% 2% 2% 21% Production value breakdown by segment [2010; PC + LCV; Bn EUR] 17% 19% 17% 49% 45% 40% 19% 24% 14% 7% 12% LCV A B C D E+ MPV/SUV 2015 6,18 6% 1% 11% 2010 3,21 7% 9% 2007 1,96 17,8% CAGR Vehicle value [2010; kEUR; VAT excl.] 5 8 10 40 80 16 5
Indias Demographic Dividend
Indias Demographic Dividend Implications for Auto Industry The Indian automotive industry is expected to be the worlds third largest market by 2030, only behind China and the US India is estimated to become the fifth-largest Personal Vehicle producer in the world by 2014 With the establishment of more R&D centres, likely to be more product development initiatives from India Much greater segmentation of the market Entry level vehicles Need for premium travel options, SUVs for camping, off-road vehicles
Export Hub Polo
Auto Component Supplier Footprints
Auto Component Growth
Auto Component Tier 1 Suppliers
Challenges in India
Challenges in India Beyond the Indian Heroes India is at an inflexion point in terms of automotive growth Suppliers must scale up in about 1/3 of the time vs. China Challenges with many (in particular, Tier II, Tier III) suppliers abound R&D capability Quality understanding (despite certification) Process competence (project management, quality and production process systems, etc.) Root cause analysis and execution of necessary measures Systematic testing despite clear customer expectations Eliminate the symptom, don't solve the problem
Government Initiatives Government to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended up to March 31, 2015. An increase in excise duty from 27 to 30% has been allowed for SUVs with engine capacity exceeding 1,500 cc. The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14% to 13%. Government allows 100% FDI in the automotive industry through automatic route.
Government Initiatives Road Ahead The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during April 2000 to October 2013 was recorded at US$ 9,079 million, amounting to 4 per cent of the total FDI inflows
Opportunities for Global Leverage
Key Automotive Trends
Expected changes in market conditions and barriers 21 In India, respondents expect a decrease in all trade barriers, and in Brazil and Russia, import export/duties and governmental interventions are forecast to ease.