Automotive Industry in India: Capabilities &

Growing Opportunities

Amit Mukherjee

Deputy Executive Director, ACMA

25th May, 2016

1

• About ACMA

• India: A Vibrant Economy

• Automotive Industry in India

• Auto Component Industry in India

• Policy Environment

• Strengths & Challenges

• The Way Forward

Agenda

2

About ACMA

3

About ACMA

• Established in 1959

• Apex body of Auto Component Industry in India

• Over 700+ members from the Organized sector

• Represents 85% of the Industry by turnover

• Represented on all Government and Industry bodies –

• Strategic to the Auto Sector

• Offices across all Regions in the Country

• An ISO 9001-2008 Institution

ACMA – Excellence in Service Delivery

4

Collection &

Dissemination of

Information

Quality

Enhancement

Technology

Up-gradation

Promotes Indian Automotive Component Industry

Vital Catalyst for Industrial

Development

Trade Promotion

ACMA Services

5

India: A Vibrant Economy

6

1. Largest Democracy – 1.2 billion people, Growing Middle Class

2. 3rd largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion)

3. One of the fastest growing economies - Estimates for 2014-15: ~ 7.5%

• India’s average GDP growth rate: 7% over past 5 years

• Expected to outpace China in the next decade

4. 3rd Largest Investor base in the World

5. Robust Legal and Banking Infrastructure

6. Demographics Advantage – Youth driven economy

7. Suburbanization & Rural to Urban Migration – 140 million by 2020; 700 million by 2050

8. 2nd largest pool of Certified Professionals and highest number of Qualified Engineers in the world

9. Investment in Infrastructure

India: A Vibrant Economy

7

Infrastructure Development – A Special Thrust

(*) Also includes irrigation, water supply and sanitation, storage and gas Source: Planning commission

Railways

USD 117 bn

Roads

USD 172 bn

Total planned

infrastructure

investments of

USD 1 Trillion*

from 2012-17

Airports

USD 16 bn

Utilities

USD 331 bn

Ports

USD 36 bn Telecommunication

USD 172 bn

Source: Planning Commission * Also includes Irrigation, water supply and sanitation, storage & gas

8

Automotive Industry in India

9

Maruti Suzuki

New Holland

Mahindra

Suzuki Motorcycles

Swaraj Mazda

Tata Motors

Yamaha

Eicher

Escorts

Hero Moto Corp

Honda Motorcycle

Honda SIELCars

ICML

JCB

Automotive Clusters in India

West

Tata Motors

North

Significant Manufacturing base of OEMs – Indian & Global OEM

Ashok Leyland

BMW

Caterpillar

Daimler

Ford

Hyundai

Nissan

Renault

Royal Enfield

Same Deutz

TAFE

Tata Motors

Toyota Kirloskar

TVS

Volvo Buses

East

South

Bajaj Auto

Fiat

Force Motors

GM

John Deere

Mahindra

Man Force

Mercedes Benz

PSA

Skoda

Tata Hitachi

Tata Motors

Volkswagen

Volvo Eicher

(Illustrative List)

10

*New Hub: Sanand

Tata Motors, Maruti, Ford India

Source: SIAM

Where does India stand Globally?

11

Largest TRACTOR manufacturer

Largest TWO WHEELER manufacturer

2nd Largest BUS manufacturer

5th Largest HEAVY TRUCK manufacturer

6th Largest CAR manufacturer

8th Largest COMMERCIAL VEHICLE manufacturer

(’000 units)

CAGR 2011-15: 2%

Passenger Vehicles Production

Figures for financial year – April to March

12

Source: SIAM

2,987

3,146

3,234

3,087

3,221

3,414

2,700

2,800

2,900

3,000

3,100

3,200

3,300

3,400

3,500

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Figures for financial year – April to March

( ’000 units)

Commercial Vehicles

Tractors ( ’000 units)

CAGR 2011-15: 3%

Two & Three Wheelers

(In ’000 units)

Commercial Vehicles include:

• Small Commercial Vehicles (SCV) < 1 ton

• Light Commercial Vehicles (LCV) > 1 ton but < 7.5 tons • Medium Commercial Vehicles (MCV) > 7.5 tons but <16 tons

• Heavy Commercial Vehicles (HCV) > 16 tons

Construction Vehicles*

( ’000 units) CAGR 2011-15: -2.6%

Other Vehicles Production

Source: SIAM

62,3 69,2

50,5 52 56

10

30

50

70

90

2010-11 2011-12 2012-13 2013-14 2014-15

* E&Y Estimates

753

929

833

699 697 698

0

100

200

300

400

500

600

700

800

900

1000

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

14176 16330 16584

17713 19439 19764

0

5000

10000

15000

20000

25000

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

** 2015-16 Figures Awaited

** 2015-16 Figures Awaited

545

640 579

697

613 572

0

100

200

300

400

500

600

700

800

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Vehicles Exported from India

14

Hyundai - i10

Maruti - Alto

Hyundai - EON

Tata - Indica Mahindra - Bolero

Volkswagon - Polo

Maruti - A Star

Nissan - Micra

(Illustrative List)

Hyundai - i20

Bajaj Auto - Pulsar Hero MotoCorp – Splendor

15 Ashok Leyland

Piaggio - Ape Tata - Magic

Tata Mahindra

Bajaj - Auto

Mahindra - Alfa Mahindra - Gio Mahindra - Maxx

Vehicles Exported from India

(Illustrative List) 15

Auto Component Industry in India

16

17

Turnover - Auto Component Industry: 2010-15

Gro

wth

Rate

(Turnover includes supplies to OEMs, aftermarket sales and exports)

(US

D B

illi

on

)

CAGR:

2010 -15: 5%

30,8

41,3 42,2 39,7

35,1

38,5

27,8%

34,1%

2,2%

-5,9%

-11,5%

9,6%

-20%

-10%

0%

10%

20%

30%

40%

0

5

10

15

20

25

30

35

40

45

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

18

Exports - Auto Component Industry: 2010-15

US

D B

illio

n G

row

th ra

te

Africa; 7,11% Latin America and the

Caribbean; 7,35%

North America; 21,39%

Asia; 25,16%

Europe; 38,11%

Oceania ; 0,88%

CAGR: 22%

Exports Destinations: Top 10 Countries

4,2

6,7

8,8

9,7 10,2

11,22

-17,6%

58,6%

32,3%

9,9% 5,4% 10,0%

-40%

-20%

0%

20%

40%

60%

80%

0

2

4

6

8

10

12

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

264.44296.47

337.69

524.95

728.23

53.42 70.5794.45

71.90 62.55

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

2010-11 2011-12 2012-13 2013-14 2014-15

Exports to Turkey

Imports from Turkey

Indo- Turkey Auto Component Trade

Source: Global Trade Atlas

(GTA)

US

D m

illi

on

Components Exports Globally

20

Drive Transmission & Steering: • Clutch Assembly

• Clutch Plate

• Crown Wheel Pinion

• Drive Axle Shaft

• Power Steering Universal Joint

• Drove Shaft Slip Yoke

• Spider Kit

• UJ Cross

• Ball Suspension Joints

• Control Arm

Suspension & Braking: • Brake Pads / Lining / Shoe

• Master Cylinder Repair Kit

• Shock Absorbers

• Struts

• Wheel Cylinder Repair Kit

• Leaf Spring

Electricals: • Starter

• Alternator

• AC Condenser

• Spark Plugs and Glow Plugs

• Ignition Coils

• Control Cables

• Armature

Cooling Systems: • Radiators

• Water & Oil Pump

• Viscous Fan Assembly

Consumables & Miscellaneous: • Filters

• Wheel Bearing

• Wiper Blades

Engine Components: • Pistons

• Piston Rings

• Cylinder Liners & Heads

• Engine Gaskets

• Engine Bearing & Valves

• Crank Shaft

• Chain Sprocket

• Connecting Rods

• Tappets

(Illustrative List)

OEM/TIER 1 account for 80%; Aftermarket for 20%

Increased Component Outsourcing

Tier 1 Component Manufacturers • Bosch

• Continental

• Cummins

• DANA

• Delphi

• Denso

• Eaton

• Getrag

• GE

• Kohler

• Kolbenschmidt

• Magna

• Meritor

• TRW

• Valeo

OEMs • BMW

• Caterpillar

• Ford

• FIAT

• GM

• John Deere

• Kubota

• MAN

• Mercedes-Benz

• Nissan

• Peugeot

• Renault

• Toyota

• Volkswagen

Over 35 IPOs of Global OEMs & Tier 1 Procuring from India

Indian components already driving on international roads

(Illustrative List)

21

Policy Environment & Trade

22

Favorable Policy Regime

Auto Policy 2002 and Auto Mission Plan 2006-16 – framework for

Automotive Manufacturing in India

• Manufacturing and Imports Free from Licensing and

Approvals

• WTO compliant policies (no import restrictions and

reduced tariff levels)

• Robust Legal system and stable Foreign Exchange

regime

• Joined UN-ECE WP 29 for Global Standard in

Technology

• Increased budgets for R&D activities

• 100% FDI permitted without prior Govt. approval

Robust Indian

Automotive

Industry

23

24

Make in India

The Make in India program includes major new initiatives designed to facilitate

investment, foster innovation, protect intellectual property, and build best-in-

class manufacturing infrastructure.

“Come, Make In India”- Hon’ble Mr Narendra Modi, Prime Minister of India

Strengths & Challenges of Indian Component

Suppliers

25

Indian Suppliers’ Focus – Global Best Practices

Industry fast embracing modern

shop-floor practices:

5-S; 7-W

Kaizen

TQM

TPM

6 Sigma

Lean Manufacturing 651

546

287

162

ISO 9001

TS 16949

ISO 14001

OHSAS…

Deming

Award - 14

Japan Quality

Medal - 5 JIPM - 3 Shingo Silver

Medallion - 2

TPM Award

- 15

Largest no. of Deming Award winning companies outside Japan

Focus on Quality

26

27

Auto Components Supply to OEMs

OEMs consumption includes locally produced Components and Imports

SCV Less than 2 T

LCV 2 to 7.5 T

MCV 7.5 to 16 T

HCV More than 16 T

PVs; 45%

SCV ; 1% LCV ; 4%

MCV ; 5%

HCV; 8%

Three-Wheeler; 4%

Two-wheelers; 22%

Backhoe Loaders; 2%

Others; 2% Tractors; 8%

28

Challenges

Ch

all

en

ge

s

High Cost of Capital

Capacity Utilization

Infrastructure Challenges & Cost

Roads

Ports

Power Imports - higher than exports

Combating Counterfeit Parts

Skilled Manpower

Building R&D Competence & Ecosystem

Increasing focus on Innovation and Research

• AMD

• Boeing

• Bosch

• Caterpillar

• Continental

• Cummins

• Ford

• GM

• GE

• Honda

• Honeywell

• Hyundai

• Intel

• Magna

• Mercedes Benz

• Microsoft

• Renault Nissan

• Suzuki

• Valeo

Design & Research Centers of leading Global companies in India

(Illustrative List)

29

The Way Forward

30

Conclusion

• Vibrant Indian Economy

• 2020: USD 115 billion Auto Component Industry

• Growing Engineering and IT capability for Designing &

Manufacturing

• Respect for IPR

• Opportunity to serve partnerships with Indian suppliers for servicing

the Global and Domestic Markets

India: The Gateway to Growth

31

32

Please block your diary for the following:

IAutoConnect 2016, September/ October 2016: With the support from

Ministry of Commerce, Government of India ACMA is organising a Reverse

Buyer- Seller Meet to further enhance component exports globally. We will

be hosting 150 buyers from Iran, Africa, Central & Eastern Europe (CEE),

CIS, ASEAN, West Asia, Japan etc. to visit India. More than 200 ACMA

Member companies will be showcasing their product offerings and

manufacturing excellence

2nd Global Summit, January, 2017: After the resounding success of the

first summit held in February this year, the next Global summit is being

planned to be held in January 2017. Like the first summit, the second in line

will also be a congregation of stakeholders from the Automotive Industry

worldwide

ACMA

The Capital Court, 6th Floor, Olof Palme Marg, Munirka, New Delhi – 110 067, India

Tel: +91-11-26160315, Fax: +91-11-26160317

E-mail: acma@acma.in, Website: www.acma.in

Thank You

for any assistance contact

33