IIM-Auto Components 2

8/2/2019 IIM-Auto Components 2

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AUTO COMPONENT

INDUSTRY

Presented By: Jagmohan Singh

Mainak Aggarwal

Saurabh Chaudhary

Varun Keservani


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Auto Components India has the most competitive auto parts

manufacturing industry in the world, with Indian automotivecomponents being widely preferred by major automobilemanufacturing companies. The auto component companies in Indiaare contributing to the growth of this sector by providing genuine,

cheap and reasonably priced automotive parts.

The Indian automotive components industry has actively and quicklytransformed from a domestic market supplier, to one of the essentialauto parts supplier in the world.

The Indian auto component sector has been growing at 20 per cent ayear since 2000 and is projected to maintain the high-growth phaseof 15-20 per cent till 2015.

Introduction-Auto Component Industry


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In 1961 Hindustan Motors develop the auto

components which was the initial stage of the

components industry

In 1981,Maruti Motors tie up with Suzuki that gave

real impetus to growth of auto component industry

Evolution of Auto Components industry


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An auto component industry can be segmented on the

basis of the production of component types as below

Engine Parts

Drive Transmission and Steering Parts

Suspension and Brake Parts

Electrical Parts

Equipments Other Parts

Classification and Structure of Auto Component Industry


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Indian companies without any collaboration or havingvery minimal collaboration with any foreigncompanies for e.g. Sundram Brake Lining, SundramFastners.

Indian companies with foreign collaboration, such asIndian Nippon Electricals, Hinoday etc.

MNCs completely owned subsidiaries or the units inwhich they have major control. For e.g. Delphi,Visteon, Denso, MICO etc.

Structured of Auto Component Industry in India


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An auto component industry can be segmented

on the basis of the production of componenttypes as below

Engine Parts Drive Transmission and Steering Parts

Suspension and Brake Parts

Electrical Parts Equipments

Other Parts

Classification and Structure of Auto Component Industry


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Auto parts maker Robert Bosch of Germany will invest US$ 201.4 million in its

Indian subsidiaries over the next two years. Bulk of the investment will be in MotorIndustries Co Ltd (Mico) -- the Bosch flagship in India.

Japanese electronic major Hitachi Ltd is planning to start auto componentmanufacturing in India when its OEMs-Isuzu Motor and Nissan Motor--startmanufacturing their cars in India.

GKN Driveline, an arm of UK-based auto component company GKN, plans to opena new manufacturing facility in India.

Dubai-based auto ancilliary major Parts International Company has plans to investapproximately US$ 3.6 million in India over three years. This includes setting up amanufacturing facility meant to service exports to CIS and SAARC countries.

Global auto giant Toyota is looking to set up a gearbox manufacturing plant in Indiato serve the Asian market.

German automotive systems supplier Continental AG has begun formal operationsin India by setting up a liaison office in Gurgaon and a technical centre in

Bangalore.

Auto components Investments in India


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Motor Industries Company of India

Bharat Forge

Sundaram Fasteners

Wheels India

Amtek Auto

Motherson Sumi

Rico Auto

Subros

Leading Manufacturers


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Source:-EY


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Setting up of the National Automotive Testing and R&D Infrastructure

Project (NATRIP) at a total cost of US$ 388.5 million for enabling the

industry to usher in global standards of vehicular safety, emission and

performance standards.

Finalization of the Automotive Mission Plan (AMP) 2006-2016 for making

India a preferred destination for design and manufacture of automobile and

automotive components.

The reduction in customs on key metallic raw materials and inputs for the

auto-component industry.

Reduced excise duty

Government Initiatives


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2010-2011


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SWOT ANALYSIS


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Cost competitiveness in terms of Labour and Raw

material

Established manufacturing base

Qualified and skilled man power

Growing domestic automotive industry

Manufacturing capabilities with International quality

standards High operational efficiency

STRENGTHS


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1. Low investment in Research and Development

2. Limited knowledge of product

3. Limited domestic market for various components inhibiting

capacity creations.

4. Comparatively poor infrastructure for supply chain and exports

5. Lack of experience in system integration

WEAKNESSES


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The growing need to outsource

Continuous pressure on global OEMs and Tier 1s to reduce cost and source from low cost countries

Higher frequency of introducing of newer models by automakers

Global market opportunity itself is the ultimate opportunity provided by auto industry.

Leverage on product engineering expertise to improve the worthiness and exports of auto component.

Auto component industry in India has potential to grow at a CAGR of 13% to reach US$40 billion by

2015.

Exports projected to grow at over 30% p.a.

India amongst the most competitive manufacturers of Auto Components; especially-Metal Intensive

components: Forgings, Stampings, Castings

- Skilled Labour-intensive components

Potential of over US$5 billion for investment in India.

Announcement of 'Automotive Mission Plan'

OPPORTUNITIES


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Competition from other low cost countries

Expansion of the European

Appreciation of Rupee

Developments of new technologies

Large number of OEMs entering in Indian market may result

into migration of talents from supplier to OEMs

THREATS


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Auto components exports from India form a small percentage of

the global exports market. India is not alone in developing its auto

component industry to take advantage of growing exports business.

Countries like Thailand, Turkey, and Mexico are trying hard to

become a Detroit in their respective regions.

China has been trying to replicate its success in capital goods

manufacturing to the automotive segment. All leading automakers

have either entered or are queuing up to enter Chinas large vehicle

market. A growing Chinese vehicle market is both a challenge and

an opportunity to the Indian auto components manufacturers.

Competition


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One obvious way for the Indian manufacturers to compete in theglobal export markets is to focus on their current areas of strength.As the industry continues to grow with new export orders fromautomakers some strategies that Indian manufacturers can adopt togain success in these markets include:

Identify products where there is continued aftermarket demand forolder technologies, even though the original equipment market hasmoved forward. For example, tire manufacturers export cross plytires to the developed world as the manufacturing has moved on toradial.

Focus on low volume products and niche vehicle segments like off-road vehicles in U.S. and Europe that will provide good volumes forIndian manufacturers.

Continue to build strong relationships with existing originalequipment customers.

Strategies to Compete


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Documents

IIM-Auto Components 2