SIX CHALLENGES FOR THE AUTO SECTOR - … · quality standards. Today the Indian consumers demand...
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SIX CHALLENGES FOR THE AUTO SECTOR Three things needed to improve the quality of Indian vehicles and components Pawan Goenka Nurture talent and develop competencies in product development and manufactur- ing engineering. In the automotive industry, India has come a long way in the last 10 years. Today, Indian OEMs (original equipment manufac- turers or auto makers) are constantly working with technologies and product development processes which global OEMs have acquired over years of R&D and experi- ence. Our challenge is to deliver the same results in a much shorter time and for far less cost while maintaining global quality standards. Today the Indian consumers demand the best. So the key challenge is of developing people skills and competencies specifically in the areas of product development and manufacturing engineering. Promote a culture of customer centricity in the organization. Technologies will create the platform, but “quality” thrives among people who are customer centric. An organizational culture that has customer centricity at its core is extremely important for improving “customer perceived quality” of the product. is culture would help the organi- zation to keep in tune with the ever-evolving customer needs and the variances between different cultures. In fact, I feel that India can lead the way in customer centricity. Process discipline. e third ingredient to good quality is “process discipline” . A typical Indian organization still lacks process discipline as compared to a Japanese organization and this is what I believe is very important for sustained delivery of good quality. Three necessary things for Indian vehicle makers to become truly global players Pawan Goenka Leverage the power of the billion—billion brains, billion pair of hands, billion consum- ers. It has three dimensions. One, leverage Indian intellect to create innovative and sustain- able products which deliver competitive quality across global markets. Two, leverage our cost sensitive manufactur- ing capabilities and three, leverage the untapped market potential of the billion plus. Build scale in India and overseas (markets) through joint ventures and mergers and acquisitions. Growth through joint ventures and mergers and acquistions are the happening things. Global M&As by India Inc. crossed $15 billion in 2006 and are expected (to) more than double in 2007. Invest in “brand India” . A joint effort of industry and the Indian government. For Indian OEMs, entry to overseas markets is a tough job. We are an unknown name. To succeed in the overseas markets, we need something more than the product. We need “brand India” . Three ways to reduce congestion on India’s busiest roads Pawan Goenka Innovate the mass transpor- tation systems (people and goods) within the city limits. Introduce one single authority which is accountable for developing and maintaining the transportation infra- structure. Intense education/awareness programme for road users— could be a joint venture among civic authorities, industry, media and educational institutions. H.S. Lheem Building flyovers at critical road junctions. To strictly enforce lane discipline. Arvind Mathew Restrict congested sections to Three mandatory rules to improve road safety Pawan Goenka e mandate that we put in place needs to address three issues—infrastructure, driver education and heavy penalty for errant drivers. So, All roads to necessarily have a footpath and a two-wheeler lane. Intensive programmes for driver education and certification. Heavy penalty for not following traffic rules, specifi- cally for drunk driving. H.S. Lheem Draw the lane line correctly. Outside rear view mirror for left hand/right hand side should meet the international safety norms and should be used. High beam control and horn sound control. Speed cameras to be installed at various junctions. Arvind Mathew Wearing helmets for two- wheelers, and front and rear seat belts for four-wheelers. Driver retraining, licence control and restrict penalty system (loss of licence) for violators. Lane control, discipline at intersections, annual vehicle maintenance check. Three things that you want changed in the current duty structure for imports Pawan Goenka To not have any reverse duty structure. To not make investment in India unattractive. To promote technology transfer. H.S. Lheem Reduce components’ duty to 7.5%. To discourage import of second-hand cars. To have clear-cut rules in case of free trade agreement. Arvind Mathew A uniform rate of excise duty on all passenger vehicles, that is, passenger cars, multi- purpose vehicles and multi- utility vehicles. Align customs duties with major competitive markets (for example, China and Asean), to allow India to become an automotive hub. Eliminate the cascading of taxes and transition to a uniform tax rate across the country—ensure it is competi- tive with other developing countries. Tomotaka Ishikawa Import duty concessions on machinery for setting-up of new plant or capacity expan- sion. Continuity of high duty structure on import of used/remanufactured vehicles and auto components. Simplify the (duty) structure. The Society of Indian Automobile Manu- facturers (SIAM), an automobile industry group, meets on Thursday to thrash out details of implementing a plan that will keep growth on track in the industry. The group, which meets every year, will discuss issues such as how to tap the rural markets, the use of alternative fuels, increasing export competitiveness and the other key clauses of India’s Automotive Mission Plan (2006-16). The plan focuses on the broad areas of taxation and export-related issues, investment, safety and environment, technology, research and development (R&D), and infrastructure. Released by Prime Minister Manmo- han Singh earlier this year, it is a blue- print for the industry to reach a revenue target of $145 billion (Rs5.9 trillion) or 10% of India’s gross domestic product by 2016, nearly double the current portion. Three ways to make sure infrastructure keeps pace with exploding vehicle growth Pawan Goenka President (automotive) Mahindra & Mahindra Ltd Efficient partnership between public and private sector for road development with focus on rural roads. As per the current estimates, India needs to invest $350-$400 billion in infrastruc- ture over the next five years. Out of this, about $100 billion will need to come from the private sector. Strong and efficient project management. Political will. H.S. Lheem Managing director Hyundai Motor India Ltd Government to provide thrust on development of roads through public-private partner- ship on a priority basis. All the existing projects (such as Golden Quadrilateral) to be completed within the specified time. Road traffic signs and signals to be improved and strength- ened. Animals to be kept off the roads. Arvind Mathew President and managing director Ford India Pvt. Ltd Incentivize private sector participation—promote “pay-for-use” . Regular maintenance of existing road infrastructure. Focus on rural development and improvement in rural- urban connectivity. Tomotaka Ishikawa Managing director Yamaha Motor India Pvt. Ltd Strong political willpower and clear government policies on national highway development, rural-urban connecting roads, land acquisition for infrastruc- ture development, port development. To invite and/or collaborate with international sectors for big infrastructure projects of road, rail and port, and to force to complete in a fixed time- frame. Special infrastructure task force to monitor these projects and remove all bureaucratic as well as policy related hindrances. The SIAM meeting comes at a time when the industry is grappling with a slowdown in vehicle sales. In the first four months of this fiscal year, overall sales of automobiles in India slipped 5.7% to 2.24 million units compared with 2.4 million units a year ago. At the same time, R&D activity at home-grown companies such as Mahindra & Mahindra Ltd and Tata Motors Ltd is increasing as they seek to become significant players in the world market. In India, manufacturers such as Volkswagen AG and International Truck and Engine Corp. are spending up to Rs60,000 crore in build- ing factories, triggering concerns of overca- pacity and insufficient infrastructure to cope with this growth, affecting companies and customers alike. On the eve of the conference, ‘Mint’ asked four chief executive officers of various vehicle makers to respond on six issues that constitute the core of the automotive mission plan. Edited excerpts: H.S. Lheem Understanding the needs of customers. Strictly apply international safety and emission standards for vehicles produced in India. Remove Press Note 1 that restricts the competitive advantage of foreign companies. Arvind Mathew Invest in technology and capacity. Ensure designs and manufac- turing processes meet local market conditions. Trained manpower. Tomotaka Ishikawa To build strong R&D and engineering capabilities. To set up high quality educational institutions for providing skilled and quality manpower. To hire retired Japanese engineers to learn ways to improve quality like many Chinese manufacturers do. To develop a solid “brand India” , the industry and government have to work together. e industry needs to invest in the product and service capability, while the government needs to promote “brand India” in the form of engineering and product capabilities. H.S. Lheem Advanced R&D capabilities. Cost competitiveness to meet the global competition. Duty structure to make the industry competitive. Arvind Mathew Availability of quality products at the most competi- tive pricing. Awareness of international market requirements (legal, customer, road conditions). Invest in technology. Tomotaka Ishikawa To bridge the “technological and quality gap” with interna- tional automobile players. To build strong brand image. To develop capabilities to manage business at worldwide scale—logistics, sales and distribution. pedestrian and public transport. Enforce road discipline. Provide adequate space for different modes/speeds of transport—commercial, four-wheelers, two-wheelers, parked vehicles, pedestrians. Prohibit encroachments. Tomotaka Ishikawa Develop large-scale infrastructure for rail and road, based on future requirements (national highways/ express- ways, flyovers and rural-urban connecting roads). Develop large-scale and rapid public transport systems for urban and rural areas. Develop separate roads for slow and fast moving traffic with facilities for pedestrians. Tomotaka Ishikawa Road discipline enforcement—speed limit, lane driving, traffic laws, etc. Compulsory driver’s training and driving tests through authorized centres before giving licence. Segregation of vehicles as per the road uses. For example, two- and three-wheelers not allowed on expressways where minimum speed is 80km per hour and removal of pedal rickshaws (manual tricycles) from urban roads. 1 2 4 3 1 Pawan Goenka, 2 H.S. Lheem, 3 Arvind Mathew, 4 Tomotaka Ishikawa B Y R AVI K RISHNAN [email protected] NEW DELHI
Transcript of SIX CHALLENGES FOR THE AUTO SECTOR - … · quality standards. Today the Indian consumers demand...
SIX CHALLENGES FOR THE AUTO SECTOR
SIX CHALLENGES
Graphic by Ahmed Raza Khan-/Mint
Three things needed to improve the quality of Indian vehicles and components
Pawan Goenka
Nurture talent and develop competencies in product development and manufactur-ing engineering. In the automotive industry, India has come a long way in the last 10 years. Today, Indian OEMs (original equipment manufac-turers or auto makers) are constantly working with technologies and product development processes which global OEMs have acquired over years of R&D and experi-ence. Our challenge is to deliver the same results in a much shorter time and for far less cost while maintaining global quality standards. Today the Indian consumers demand the best. So the key challenge is of developing people skills and competencies speci�cally in the areas of product development and manufacturing engineering. Promote a culture of customer centricity in the organization. Technologies will create the platform, but “quality” thrives among people who are customer centric. An organizational culture that has customer centricity at its core is extremely important for improving “customer perceived quality” of the product. �is culture would help the organi-zation to keep in tune with the ever-evolving customer needs and the variances between di�erent cultures. In fact, I feel that India can lead the way in customer centricity. Process discipline. �e third ingredient to good quality is “process discipline”. A typical Indian organization still lacks process discipline as compared to a Japanese organization and this is what I believe is very important for sustained delivery of good quality.
Three necessary things for Indian vehicle makers to become truly global players
Pawan Goenka
Leverage the power of the billion—billion brains, billion pair of hands, billion consum-ers. It has three dimensions. One, leverage Indian intellect to create innovative and sustain-able products which deliver competitive quality across global markets. Two, leverage our cost sensitive manufactur-ing capabilities and three, leverage the untapped market potential of the billion plus. Build scale in India and overseas (markets) through joint ventures and mergers and acquisitions. Growth through joint ventures and mergers and acquistions are the happening things. Global M&As by India Inc. crossed $15 billion in 2006 and are expected (to) more than double in 2007. Invest in “brand India”. A joint e�ort of industry and the Indian government. For Indian OEMs, entry to overseas markets is a tough job. We are an unknown name. To succeed in the overseas markets, we need something more than the product. We need “brand India”.
Three ways to reduce congestion on India’s busiest roads
Pawan Goenka
Innovate the mass transpor-tation systems (people and goods) within the city limits. Introduce one single authority which is accountable for developing and maintaining the transportation infra-structure. Intense education/awareness programme for road users— could be a joint venture among civic authorities, industry, media and educational institutions.
H.S. Lheem
Building �yovers at critical road junctions. To strictly enforce lane discipline.
Arvind Mathew
Restrict congested sections to
Three mandatory rules to improve road safety
Pawan Goenka
�e mandate that we put in place needs to address three issues—infrastructure, driver education and heavy penalty for errant drivers. So, All roads to necessarily have a footpath and a two-wheeler lane. Intensive programmes for driver education and certi�cation. Heavy penalty for not following tra�c rules, speci�-cally for drunk driving.
H.S. Lheem
Draw the lane line correctly. Outside rear view mirror for left hand/right hand side should meet the international safety norms and should be used. High beam control and horn sound control. Speed cameras to be installed at various junctions.
Arvind Mathew
Wearing helmets for two-wheelers, and front and rear seat belts for four-wheelers. Driver retraining, licence control and restrict penalty system (loss of licence) for violators. Lane control, discipline at intersections, annual vehicle maintenance check.
Three things that you want changed in the current duty structure for imports
Pawan Goenka
To not have any reverse duty structure. To not make investment in India unattractive. To promote technology transfer.
H.S. Lheem
Reduce components’ duty to 7.5%. To discourage import of second-hand cars. To have clear-cut rules in case of free trade agreement.
Arvind Mathew
A uniform rate of excise duty on all passenger vehicles, that is, passenger cars, multi-purpose vehicles and multi-utility vehicles. Align customs duties with major competitive markets (for example, China and Asean), to allow India to become an automotive hub. Eliminate the cascading of taxes and transition to a uniform tax rate across the country—ensure it is competi-tive with other developing countries.
Tomotaka Ishikawa
Import duty concessions on machinery for setting-up of new plant or capacity expan-sion. Continuity of high duty structure on import of used/remanufactured vehicles and auto components. Simplify the (duty) structure.
Source: SIAM
Domestic sales
Passenger Vehicles
HEADLINE FOR GRAPHICS
4,12,684
4,64,786
65,615
66,873
12.63%
1.92%Exports
Domestic sales
Commercial Vehicles
Exports
Domestic sales
Two-wheelers
Exports
April-July 2006 April-July 2007 % change
3.48%
19.91%
20.11%
-9.18%
1,28,531
14,427
17,300
2,23,086
2,67,942
2,67,942
2,243,722
1,33,002
The Society of Indian Automobile Manu-facturers (SIAM), an automobile industry group, meets on Thursday to thrash out details of implementing a plan that will keep growth on track in the industry. The group, which meets every year, will discuss issues such as how to tap the rural markets, the use of alternative fuels, increasing export competitiveness and the other key clauses of India’s Automotive Mission Plan (2006-16). The plan focuses on the broad areas of taxation and export-related issues, investment, safety and environment, technology, research and development (R&D), and infrastructure. Released by Prime Minister Manmo-han Singh earlier this year, it is a blue-print for the industry to reach a revenue target of $145 billion (Rs5.9 trillion) or 10% of India’s gross domestic product by 2016, nearly double the current portion.
Three ways to make sure infrastructure keeps pace with exploding vehicle growth
Pawan Goenka President (automotive)Mahindra & Mahindra Ltd
E�cient partnership between public and private sector for road development with focus on rural roads. As per the current estimates, India needs to invest $350-$400 billion in infrastruc-ture over the next �ve years. Out of this, about $100 billion will need to come from the private sector. Strong and e�cient project management. Political will.
H.S. Lheem Managing directorHyundai Motor India Ltd
Government to provide thrust on development of roads through public-private partner-ship on a priority basis. All the existing projects (such as Golden Quadrilateral) to be completed within the speci�ed time. Road tra�c signs and signals to be improved and strength-ened. Animals to be kept o� the roads.
Arvind Mathew President and managing directorFord India Pvt. Ltd
Incentivize private sector participation—promote “pay-for-use”. Regular maintenance of existing road infrastructure. Focus on rural development and improvement in rural-urban connectivity.
Tomotaka Ishikawa Managing directorYamaha Motor India Pvt. Ltd
Strong political willpower and clear government policies on national highway development, rural-urban connecting roads, land acquisition for infrastruc-ture development, port development. To invite and/or collaborate with international sectors for big infrastructure projects of
road, rail and port, and to force to complete in a �xed time-frame. Special infrastructure task force to monitor these projects and remove all bureaucratic as well as policy related hindrances.
The SIAM meeting comes at a time when the industry is grappling with a slowdown in vehicle sales. In the first four months of this fiscal year, overall sales of automobiles in India slipped 5.7% to 2.24 million units compared with 2.4 million units a year ago. At the same time, R&D activity at home-grown companies such as Mahindra & Mahindra Ltd and Tata Motors Ltd is increasing as they seek to become significant players in the world market. In India, manufacturers such as Volkswagen AG and International Truck and Engine Corp. are spending up to Rs60,000 crore in build-ing factories, triggering concerns of overca-pacity and insufficient infrastructure to cope with this growth, affecting companies and customers alike. On the eve of the conference, ‘Mint’ asked four chief executive officers of various vehicle makers to respond on six issues that constitute the core of the automotive mission plan. Edited excerpts:
H.S. Lheem
Understanding the needs of customers. Strictly apply international safety and emission standards for vehicles produced in India. Remove Press Note 1 that restricts the competitive advantage of foreign companies.
Arvind Mathew
Invest in technology and capacity. Ensure designs and manufac-turing processes meet local market conditions. Trained manpower.
Tomotaka Ishikawa
To build strong R&D and engineering capabilities. To set up high quality educational institutions for providing skilled and quality manpower. To hire retired Japanese engineers to learn ways to improve quality like many Chinese manufacturers do.
To develop a solid “brand India”, the industry and government have to work together. �e industry needs to invest in the product and service capability, while the government needs to promote “brand India” in the form of engineering and product capabilities.
H.S. Lheem
Advanced R&D capabilities. Cost competitiveness to meet the global competition. Duty structure to make the industry competitive.
Arvind Mathew
Availability of quality products at the most competi-tive pricing. Awareness of international market requirements (legal, customer, road conditions). Invest in technology.
Tomotaka Ishikawa
To bridge the “technological and quality gap” with interna-tional automobile players. To build strong brand image. To develop capabilities to manage business at worldwide scale—logistics, sales and distribution.
pedestrian and public transport. Enforce road discipline. Provide adequate space for di�erent modes/speeds of transport—commercial, four-wheelers, two-wheelers, parked vehicles, pedestrians. Prohibit encroachments.
Tomotaka Ishikawa
Develop large-scale infrastructure for rail and road, based on future requirements (national highways/ express-ways, �yovers and rural-urban connecting roads). Develop large-scale and rapid public transport systems for urban and rural areas. Develop separate roads for slow and fast moving tra�c with facilities for pedestrians.
Tomotaka Ishikawa
Road discipline enforcement—speed limit, lane driving, tra�c laws, etc. Compulsory driver’s training and driving tests through authorized centres before giving licence. Segregation of vehicles as per the road uses. For example, two- and three-wheelers not allowed on expressways where minimum speed is 80km per hour and removal of pedal rickshaws (manual tricycles) from urban roads.
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1 Pawan Goenka, 2 H.S. Lheem, 3 Arvind Mathew, 4 Tomotaka Ishikawa
B Y R AV I K R I S H N A N [email protected]
NEW DELHI
