Report auto component_market

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  1. 1. MARKET ATTRACTIVENESS OF AUTO COMPONENT BUSINESS IN INDIAPrepared For:Prepared By:,January 2009 IMRB International INVESTMENT POTENTIAL IN AUTO COMPONENT INDUSTRY IN INDIA 1
  2. 2. PrefaceThai-Indian business relations have improved considerably over the past decade.Thailand and India are close to concluding a Free Trade Agreement (FTA) covering tradein goods by 2010. The Free Trade Agreement between Thailand and India is expected toimprove trade relations between the two countries further. The FTA covering trade ingoods would lead to long term mutual benefits in trade and investment and thepartnership would be expanded further to cover technology know-how and expertise.Indias primary imports from Thailand are machinery, electronic appliances, textiles,plastic material, transport equipment, vegetable oil and latex. The major items of importsunder FTA are polycarbonate, cathode-ray tubes, color-TVs, air conditioners andAluminum products. Thailands main imports from India are jewelry, gemstones, steel,pharmaceuticals and ferrous metal ores.Indias trade with Thailand could touch USD 7 billion by 2010-11 propelled by adoubling in transaction under Free Trade Agreement (FTA). The EHS was implementedon September 1, 2004, under which tariffs on 82 items were to be phased out bySeptember 1, 2006 by both the sides.The trade between Thailand and India is estimated to be US $ 7 billion by 2010-11 fromUS $ 2.2 billion in 2005-06.The total trade of 82 items under Early Harvest Scheme (EHS) of the FTA was increasedby over 140 percent to about US $ 358.63 million in 2005-06 from US $ 149 million in2003-04. The share of these 82 items in India-Thailand trade increased from 10.34percent in 2003-04 to 15.68 percent in 2005-06.Thailands export to India of the identified 82 EHS items was increased from US $ 84.64million to US $ 275 million during the period from 2003 04 to 2005 06. During thesame time, Indias export to Thailand of these items increased from US $ 64.28 million toUS $ 83.03 million during the same period.MARKET ATTRACTIVENESS OF INDIAN AUTO COMPONENT INDUSTRY 2
  3. 3. In 2007, Thailands export for these 82 items was US $ 406.31 million. Due the FTAbetween two countries, Thailand is able to manage the trade surplus of US $ 598 in 2007in bilateral trade between Thailand and India.With significant potential for growth of business between the two countries, the Ministryof Commerce, Thailand and Royal Thai Embassy would like to understand theinvestment potential across the following identified product categories:- 1. Home Utility and Furnishing: This would broadly include three product categories:- a. Furniture Largely focusing on house hold furniture e.g. Sofa-set, Dining table, Corner / corner table etc. Also covering office furniture e.g. office chairs, cubicles, tables etc and open-air furniture i.e. the furniture used in the garden, near pools etc. b. Interior Decoration items This would include: Show pieces, Wooden handicraft, photo frames, artificial flowers. c. Utensils Household (kitchen), HoReCa (Hotel Restaurant Catering) Segment, Institutional / Office. d. Plastic Products - Food containers, plastic storage boxes etc e.g. Cello, Tupperware, Milton, Nyasa etc. 2. ConstructionMaterial: Thiswould include Bathroom Fittings, Tiles/Floorings (including wooden), Roof Tiles (used in the costal areas), Metal (Al, Tin etc) / Gypsum boards used for partition. 3. Hospitality Services: This would be understood with the objective of tie-up with existing hotels spas, specialty restaurant (e.g. Thai cuisine restaurant), health wellness services etc. The client would be interested in management control and running the property. The stand alone spas e.g. Kaya clinic is also covered in the purview of the study.MARKET ATTRACTIVENESS OF INDIAN AUTO COMPONENT INDUSTRY 3
  4. 4. 4. Auto parts and accessories: It would cover both types of auto parts:-a. Essential auto parts (low volume high value items e.g. gear box,clutch plates etc and high volume low value items like break pads etc).These parts would be for 2-wheelers (e.g. moulding etc) and 4-wheelers both cars and commercial vehicles.b. Accessories / decorative items e.g. music systems, alloy wheels etcIn order to understand the trade potential across the above categories, the Ministry ofCommerce, Thailand and Royal Thai Embassy has commissioned Business and IndustrialResearch Division (BIRD) of IMRB International to avail its research based consultancyservicesMARKET ATTRACTIVENESS OF INDIAN AUTO COMPONENT INDUSTRY4
  5. 5. Table of Contents1 EXECUTIVE SUMMARY ................................................................................................... 71.1 Automotive Component OEM and Replacement Markets .................................................... 101.2 Foreign Direct Investment and Government Policy .............................................................. 111.3 Attractiveness of Auto Component Sub-segments and Entry Strategy ................................. 112 GLOBAL AUTO COMPONENT INDUSTRY ................................................................ 132.1 Global Trends in the Automotive Industry............................................................................ 132.2 Major Auto and Auto Component Markets ........................................................................... 142.3 Major Auto Component Companies...................................................................................... 173 INDIAN AUTO COMPONENT INDUSTRY ................................................................... 183.1 Major Auto Component hubs in India ................................................................................... 193.2 Transition of Indian Auto Component Industry .................................................................... 203.3 Auto Component Industry Cost Buildup ............................................................................... 213.4 Classification of Auto Component Market ........................................................................... 223.5 Tier Structure of Auto Component Market ........................................................................... 233.6 Classification of Auto Components ...................................................................................... 243.7 Major Automobile Players .................................................................................................... 253.8 Major Automobile Component Players (Two, Three and Four Wheeler players) ................ 263.9 Foreign Collaboration in the Auto Component Industry....................................................... 274 INDUSTRY AND MARKET ANALYSIS ........................................................................ 294.1 Macro and Micro Environment Analysis: Indian Auto Component Market ......................... 304.2 SWOT Analysis: Indian Auto Component Market ............................................................... 315 MARKET SIZE AND GROWTH FORECASTS............................................................. 335.1 Global auto component market size and growth estimates ................................................... 335.2 Indian auto component market size and growth estimates .................................................... 345.2.1Production (in Number) and Growth rates of all vehicle categoriesincluding two wheelers .............................................................................................. 345.2.2Consolidated Production, Export and Investment in value terms ............... 355.2.3Value wise break up of sub-segments two and four wheelers ................. 365.2.4Import estimates and trends (for 2 and 4 wheelers) .................................... 365.2.5Auto Component Export Destinations ........................................................ 385.2.6Trends in growth and margins Two and Four wheelers .......................... 396 AUTO COMPONENT OEM AND REPLACEMENT MARKET ................................. 406.1 OEM Market in the Indian auto component industry............................................................ 406.2 OEM Component Sourcing ................................................................................................... 406.3 OEM Vendor Selection Process ............................................................................................ 416.4 Inventory in Supply Chain of OEM suppliers ....................................................................... 426.4.1 Small and Medium OEM vendors .............................................................. 426.4.2 Large OEM vendors / strategic Tier-1 suppliers......................................... 43MARKET ATTRACTIVENESS OF INDIAN AUTO COMPONENT INDUSTRY 5
  6. 6. 6.5 Break up of replacement parts market by type of vehicle ..................................................... 446.6 Automotive component replacement market: impact of structural changes ......................... 446.7 OEMs focus on replacement market .................................................................................... 456.8 Channel structure for auto component market ...................................................................... 467 GOVERNMENT INITIATIVES........................................................................................ 487.1 Foreign Direct Investment ..................................................................................................... 487.2 Auto Policy ............................................................................................................................ 487.3 Automotive Mission Plan 2016 ............................................................................................. 508 GROWTH DRIVERS AND CHALLENGES ................................................................... 518.1 Growth Drivers for Replacement Demand ......................................