Embed Size (px)
Citation preview
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 7th largest market by 2016
• 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 MANUFACTURERSVEHICLE MANUFACTURERS
13 manufacturers
Suzuki Tata Hyundai Mahindra Toyota Honda GM Ford HM/
Mitsubishi Skoda Force Fiat Mercedes
7 manufacturers
Tata Ashok
Leyland Mahindr
a Eicher Force Swaraj
Mazda HM
Passenger Vehicles(1 308 913 ) Passenger Vehicles(1 308 913 )
Commercial Vehicles(400 000 veh.)Commercial Vehicles(400 000 veh.)
Tractors(296 000 Tractors(296 000
2 – wheelers7600801 veh.) 2 – wheelers7600801 veh.)
3 – wheelers(434 424)3 – wheelers(434 424)
LCV’s(171 781 .) LCV’s(171 781 .)
M&HCV’s & Buses(219 297 veh.)M&HCV’s & Buses(219 297 veh.)
8 manufacturers
Hero Honda
Bajaj TVS Yamah
a LML Honda Kinetic Royal
Enfield
6 manufacturers
Bajaj Piaggio Mahind
ra Force Atul
Auto Scooter
s India
8 manufacturers Escorts M&M L&T Punjab
Tractors New
Holland ITL –
Renault John-
Deere Steyr
7 manufacturers
Tata Ashok
Leyland Eicher Swaraj
Mazda Volvo Tatra
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 regulatory standards with the rest of the world
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
New testing & homologation center at MANESAR
7
Increase export revenueto $ 35 billion by 2016 from$ 4.1 billion at present
Increase export revenueto $ 35 billion by 2016 from$ 4.1 billion at present
On 29.01.07, the Prime Minister released Automobile
Plan 2006 -2016 to give a road map to Indian
Automobile Industry
Indian Automotive Industry
Increase turnover to$145 billion by 2016from $ 35 billionat present
Increase turnover to$145 billion by 2016from $ 35 billionat present
Provide employment toadditional 25 million peopleby 2016
Provide employment toadditional 25 million peopleby 2016
Automotive Mission Plan 2016
By 2016, the Automotive sector is expected to contribute
10% of the country’s GDP and 30~35% of the Industry
Government of IndiaSIAMACMA
8
ACMA VISION 20:20:1 ACMA VISION 20:20:1
VISION
20:20:1
2020
11
202020:20:120:20:1
Achieve $20 billion in Domestic SalesAchieve $20 billion in Domestic SalesAchieve $20 billion in Domestic SalesAchieve $20 billion in Domestic Sales
Achieve $20 billion in Exports SalesAchieve $20 billion in Exports SalesAchieve $20 billion in Exports SalesAchieve $20 billion in Exports Sales
Create 1 million additional JobsCreate 1 million additional JobsCreate 1 million additional JobsCreate 1 million additional Jobs
Automotive Mission Plan 2016
Automotive Components Industry
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 AutoIndustry
India Advantage and business opportunities
10
India’s huge geographic spread
Easier finance schemes
Replacement of aging four wheelers
Increasing Road Development, Golden Quadrilateral
Increasing dispensable income of rural agri sector
Higher GDP growth
Increasing disposable income with the service sector
Graduating from Two wheeler to Four wheeler
Indian Automotive Industry - Growth Drivers
Growing Concept of Second Vehicle in Urban Areas
Two wheeler story could be repeated in the car segment
8 out of top 10 global companies have India presence
They contribute 60 % of global productionbut
25 % of India Production
12
The Motorization ProcessThe Motorization Process
200019901960 19801970
Cars for 1.000 inhabitants in different countries
150
300
750
450
600
2010
2006USA 813Italy 673Germany 597France 595Japan 593UK 571Poland 385S.Korea 322Brasil 124China 23India 12
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 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
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
The largest 2 wheeler manufacturer in the world and 1st in India.
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
Key players in the Indian auto industry - Two wheelers
PAST PERFORMANCES & CURRENT TRENDS
Market share trends : 2003-04 to 2006-07
Medium & heavy commercial vehicles
Company 03-04 04-05 05-06 06-07
TATA Motors 63.26 63.90 60.55 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 05-06 06-07
TATA Motors 48.05 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)
27
Car & MUV production - Apr - Sep
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
1000000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Nos
Catg I Catg II Catg III Catg IV Catg V MUV Total
-4% 2%
18% growth
Growth over previous period growth
7% growt
28% growt29%
growt
14% growth
Vehicle Production
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 INSTITUTION) SPECIFICALLY TO BUY COMMERCIAL VECHCILES.
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 AnalysisStrengths • 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
• Lack of technology for Indian companies
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
JAN 19 2009 39
Thank You
