Indian Automobile Industry


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Indian Automobile Industry: A study by StartBizIndia team of Corporate Professionals

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Indian Automobile Industry

  1. 1. Industry of the Month “Automobile Industry in India”eBizWire Vol. I Issue. VIII, September 2012 InsightBiz India News 2Biz Policy Updates 3The Indian Automobile Industry 4Business Idea of the Month 8StartBizIndia Discussion Platform 9Upcoming Business Summit 10Contact us 11 For more info on Business setup visit Page |1 For Business setup queries email at or call at 011 40622239
  2. 2. Biz India News Headlines• On August 29, 2012, Automotive components maker Piolax India, a Japanese auto parts maker subsidiary of Piolax of Japan, inaugurated its first Indian facility at the Sri City sets up unit at Sri City SEZ multi-product special economic zone in Andhra Pradesh. The plant is slated to commence commercial production shortly. Piolax is a global manufacturer of auto parts such as industrial fasteners, coil springs, flat springs and compact units. It has facilities in the US, the UK, China and Thailand. Volkswagen to invest €100• The Volkswagen Group aims to increase output by 10-15 per cent on a million in India €100-million investment at its production facilities in Aurangabad and Chakan in Maharashtra. On September 06, 2012 John Chacko, Volkswagen Group Chief Representative for India, said the investment would go towards minor model changes and upgradation of the two factories. The funds will also benefit Skoda and Audi’s domestic operations. The German automaker has a 1.3-lakh annual production capacity at Chakan, where it makes the Polo, Vento and Skoda’s Fabia and Rapid models.• On September 05, 2012, In a bid to ‘replicate the success’ of Israel in the Israel to set up 3 centres of farm sector, the Gujarat Government plans to set up a farming educational excellence on farm tech in institute in collaboration with Israel, offering post-graduation and Ph.D Gujarat programmes with practical training and degree from Israeli universities.• India and Pakistan will soon sign three agreements – on customs co- India, Pakistan to sign 3 operation, trade grievances redressal and mutual recognition, Commerce pacts soon to boost trade: and Industry Minister Anand Sharma said on Tuesday. India and Pakistan Anand Sharma will soon sign three agreements – on customs co-operation, trade grievances redressal and mutual recognition, Commerce and Industry Minister Anand Sharma said on Tuesday on September 05 2012. Reliance Cement begins• The production of cement from Reliance Cement Company Private Ltd, a production from Butibori unit subsidiary of Reliance Infrastructure Ltd (Reliance Infra), has begun from the first manufacturing unit at Butibori, Nagpur in Maharashtra. On September 04, 2012, the unit would essentially meet the needs of the market in Vidarbha, the company said in a communication to the stock exchanges.• Storage technology software maker EMC has signed Netmagic Solutions for design, architect and run its cloud computing infrastructure for Indian and EMC ties up with Netmagic global companies. As a part of this tie-up, Netmagic will consolidate IT Solutions infrastructure that is hosted on private or public cloud and consolidate it into a hybrid cloud computing environment. On September 03, 2012, a hybrid cloud environment helps in a mix and match of public and private IT infrastructure that can be hosted and accessed as per their requirements.• Four leading Chinese companies will visit Ahmedabad in September to Leading Chinese companies explore investment opportunities in Gujarat. The companies- Wuxi Xinje Automation, Sunfar, Estun Automation and Zhejiang Chint Electric Co-are eye Greenfield projects in Gujarat eyeing investments in greenfield projects and partnerships in Gujarat. The Chinese companies will meet entrepreneurs in Gujarat at a business conference organized by India China Economic & Cultural Council (ICEC) on September 12, 2012. For more info on Business setup visit Page |2 For Business setup queries email at or call at 011 40622239
  3. 3. Biz Policy Updates Legal Headlines• RBI allows direct investment by Indian entities in Pakistan • RBI allows direct investment by Indian On September 10, 2012.Reserve Bank of India has allowed Indian entities entities in Pakistan to make direct investment in Pakistan, giving push for bilateral trade and investments. It has now been decided that the overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route, RBI said in a notification on Friday. Reserve Bank of India has allowed Indian entities to make direct investment in Pakistan, giving push for bilateral trade and investments. It has now been decided that the overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route, RBI said in a notification on Friday. The move comes days after India allowed investment from Pakistan. RBI said it will make amendments to the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, to incorporate changes. Bilateral trade between the neighbours stood at about $3 billion and is expected to reach $6 billion in the next three years. Earlier, Pakistan had expressed concern over certain issues related with investments from India. For more info on Business setup visit Page |3 For Business setup queries email at or call at 011 40622239
  4. 4. The Indian AutomobileThe Indian Automobile Industry Industry is broadly classified into 4 categories:Introduction:Choices add the ultimate spice to life and India with the largest number ofpeople (well almost!) needs a lot of them. That is especially true when itcomes to things majorly characterized by the ever-evolving technology.And obviously, when there’s a demand, there’s going to be a largenumber of industry players competing with each other to bring out thebest possible product in a given price change.One such industry is the Indian Automobile Industry which very visiblystays on its toes to bring new models for the domestic and international • Two Wheelers form themarkets alike. The domestic players are sincerely trying to meet the major segment of Indianinternational standards and yield the best quality. Industry with almost 75% market share and henceNissans Managing Director in India, Mr. Kiminobu Tokuyama says “India leaving all other segmentsis a rapidly growing market, so therefore it is very important for global auto far behind. India forms themanufacturers". India’s potential as a manufacturing country and as a prefect market for twoconsumer base is being taken seriously all over the world. India is no wheelers because of hugemore just an information technology super power. A country which was population the major chunkmore or less ignored by the rest of the Asia, India is now becoming home of which is not urban several Asian brands owing to increasing opportunities and aprogressive economy. • Passenger Motor Vehicle Segment consists ofWith a turnover of almost $59 Million US Dollars, this industry provides Passenger Cars, Utilityemployment to 13 million people in the Indian Work-class. This industry is Vehicles & Multi Purposeone of the most competitive industries because the manufacturers face Vehicles.some challenges like increasing fuel efficiency and reducing emissionsperpetually apart from doing something innovative on a continuous basis. • Commercial Vehicles & Three Wheelers combined have a market share of 9%Indian Auto Market- Reasons to cheer: indicating that it’s the households which are theOne of the largest automobile markets in the world, India has some major consumers in thisremarkable facts to its credit which make it World renowned. The Indian industry.Auto Industry has a bright future because of several factors workingtowards increasing demand for automobiles: • The automobile industry is1. Rapid Urbanization: Currently only 21% of the population lives in the one of the mosturban areas. Given how India is performing, the figures are hoped to competitive industriestouch 35% by 2020 and 40% by 2030. because the manufacturers [Source:] face some challenges like increasing fuel efficiency2. Rising per capita GDP: The per capita GDP of India increased from and reducing emissions1200 USD in 2011 to almost 1330 USD in 2012. This is further expected perpetually apart fromcross the 2000 mark by 2015. Increasing GDP would mean increased doing something innovativepurchasing power and hence increased demand for automobiles on a continuous basis. [Source:] For more info on Business setup visit Page |4 For Business setup queries email at or call at 011 40622239
  5. 5. The Indian Automobile Industry Statistics India3. Overall growth of other industries: Industries are usually [Source: ] []interdependent on each other. The effect of expansion of other industriesis bound to percolate to the automobile industry as well. Since transport is Largest Motorcycle Producera basic need of every industry, demand for automobiles will rise with in the Worldevery positive change in an industry. [Source:] 1 81% 2nd Largest Two Wheeler 0.8 Market in the World 0.6 49% 44% 42% Growth Rate 0.4 31% 21% Largest Three Wheeler 0.2 Market in the World 0 Source: ibef, SIAM, Nasscom4. Car buyers getting younger: It is no more a hidden fact that India is 4th Largest Tractor Market inone of the youngest countries in the world with a median age of almost 26 the Worldyears; much lower than the World’s biggest economies. It only shows thatthe work class constitutes majorly of young individuals. The car buyingage has been on a decline. Where a person aged 39 used to buy a car inthe year 2000, this age has gradually come down to 33 in 2010. It is only 2nd Largest Scooterexpected to become lesser in the coming years. Producer in the World5. Growing Middle class: With the middle class of India growingannually, benefits of this sector are still untapped. It is the transition fromthe lower class to the middle class which converts car into a need from a 5th Largest Commercialluxury. Vehicle Market in the WorldOther factors like affordability, innovation, infrastructure facilities and priceof fuel also affect the demand for automobiles to a large extent. Thesechallenges keep the automakers on their toes all the time. With the middle 5th Largest Bus & Truckclass in India still growing annually, the benefits of this sector are still Market in the Worlduntapped.Recent Developments in the Industry: [Source:] 5th Largest Auto Producer in • Ford India: In the wake of increasing petrol prices, it has the upcoming economies expanded its diesel engine production capacity of its Chennai plant to keep pace with the changing demand. The plant that had the capacity to produce 2.5 Lakh engines annually in 2010; shall 10th Largest Passenger Car now be able to produce 3.4 lakh engines. It also has the capacity Market in the World of producing 2 Lakh cars. • Isuzu Motors Limited (Japan): With a capital outlay of Rs. 1000 Crores, it is planning to build a Greenfield project to target the small commercial vehicle and MUV segments. 6th Largest Passenger Vehicle Producer in the world For more info on Business setup visit Page |5 For Business setup queries email at or call at 011 40622239
  6. 6. Recent Developments in the The Indian Automobile Industry Automobile Industry: • Renault (French auto major): By launching it midsize SUV  Ford India ‘Duster’ in both petrol and diesel variants, it has successfully entered the Indian SUV market. Renault has already launched 3  Isuzu Motors Limited more vehicles this year prior to this. (Japan) • M&M Group: M&M Group after spending 4 years in the Indian 2  Renault (French auto major) wheeler segment has launched its research and development (R&D) center for two-wheelers in Pune with an investment of Rs  M&M Group 100 Crores.  MSIL (India’s largest auto • MSIL (India’s largest auto maker): It shall merge the group unit maker) “Suzuki Powertrain India Ltd” with itself so that all the diesel manufacturing facilities are under the same management. The merger will be conducted through share swap without any cash transaction.Prominent Players in the Indian Automobile Industry: India has someThese are the names which have a brilliant Pan India coverage. Apart commendable players in thefrom this, there are brands which dominate a particular region of the automobile sector. Thecountry depending on their popularity in that area. This can be studied market shares of the majorfrom the following picture: automotive companies at the end of May 2012 looked something like this; (Source: SIAM) For more info on Business setup visit Page |6 For Business setup queries email at or call at 011 40622239
  7. 7. The Indian Automobile Industry Foreign Direct Investment Policy A policy of automatic approval up to 100% FDI has been a boon for the Industry. The policy alone has led to a turnover of 12 billion USD in the Indian auto industry. No need for licensing and no restriction on import of auto components make this sector very attractive for foreign investors. Apart from this, advanced technology yet cost effectiveness and efficient manpower add to the list of advantages which India offers as a target country for investment. With a lot of foreign players like General Motors, Toyota, Renault, BMW, etc. already carrying out their activities successfully in India, FDI has definitely contributed to the growth story of the Indian auto Some Companies in Automobile Industry in The Future Forecast: India The future of Automobile Industry is so promising and cheerful that if the statistics go as estimated, then, the share of Indian exports in the Global auto market will almost triple in the years ahead. The overall automobile production in India would expand by 9.6 per cent in 2012-13. The Passenger Vehicle Market of India will sell almost 5 million vehicles by 2017-2018. The Indian Auto Exports will also grow and cross the 17 billion USD mark by 2015-2016.And, there are factors which are demand determinants playing in favour ofthe Indian automobile Industry like rising family Income, product innovations,demographics and favourable duty structure; there is a lot which the industryis yet to see.The future looks bright and being an entrepreneur, if someone is looking foropportunities in this Industry, anything creative/ innovative related to theautomobile industry is bound to work. (Source: SIAM, ACMA, FICCI and CIME) For more info on Business setup visit Page |7 For Business setup queries email at or call at 011 40622239
  8. 8. Business IDEA OF THE Month From dreaming about buying a superfast car to actually experimenting with it during the teenage; from buying a swanky car for the first time from your own salary to buying a big enough and safe car when you finally have a family of your own; it is the same story for all. And now, with the number of independent girls on the rise, the car story for them is pretty similar too. No wonder, a car is always one of the first things in everyone’s list of must- haves. But, actually having a car; new, rented or second-hand is a separate story in itself. The whole process of choosing a car, finding the appropriate dealers, negotiating and finalizing a deal and everything else that follows surely; is a cumbersome process. What would you choose? Calling up and meeting each suitable vendor individually on your own? Or logging on to a website that provides all information at one place? So that the only thing that you need to do is choose the best deal and make a final call. Well you know what we are hinting at. If you are tech savvy, know the importance of a good and interactive website and are a car lover; you have an interesting opportunity at hand. Taking cue from e-commerce based portals; you can create a similar website giving various details like: Different types of cars and their variants; the authorized company dealers and other vendors for selling & reselling of cars, individuals interested in purchase or sale, etc. The main idea is to create an online car bazaar so that you can bring the buyers and sellers together and facilitate trade between them. Such a website will give people a one stop solution to all their car woes. What more? You can even add information about various service stations for after sale requirements and publicize attractive service packages offered by them. For starting this; you will have to register your business entity, get a web domain registered which shall cost you anywhere from Rs. 500 and up for a year, hire a web designer for your website, collect the database of all the information you decide to put on your portal and tie up with a payment gateway like PayPal on your website. Last but not the least! Marketing! Everything done, your business will depend on this one magic word. To attract people you have to let them know first of all. You can go a step forward by including car accessories in the list of offerings. Keep updating regularly and add special features like latest car news for the car enthusiasts and you should be ready to keep this business going. For more info on Business setup visit Page |8 For Business setup queries email at or call at 011 40622239
  9. 9. StartBizIndia Discussion PlatformMr. Jhunjhunwala is a businessman who wishes to set up an industrialunit in Gujarat, India. He has a successful retail business which he hasrun for 20 years and wishes to transfer to his sons. This however isalso the reason that he does not know how to go about an industrialset up. What all approvals should he be looking for?A. Industrial settings are broadly classified into 4 categories in our country.Depending on the kind of set up, one has to seek the relevant industrialapproval from the relevant authority. • For setting up an SME, an Entrepreneurship Memorandum is required to be filed with the District Industries Centre for approval. • For an industrial undertaking that is not an SME but also does not require a compulsory license; then an Industrial Entrepreneurship Memorandum shall be filed with the Secretariat for Industrial Approval (SIA) • For enterprises falling under the compulsory licensing list, a letter of Intent (LOI) is required to be filed with the SIA in a prescribed form. • If one wishes to set up a 100% Export Oriented Unit (EOU) or an SEZ unit, then an application in the prescribed form has to be filed with the Development Commissioner, KASEZHowever, setting up of a business requires taking care of a lot of aspects.Various other approvals that are required for an industrial set up are asfollows:Registering the Business Entity: • Registration with the Registrar of Firms is required if you choose to have a proprietary concern or a Partnership firm • The Registrar of Companies handles applications for forming of a Company or a Limited Liability Partnership (LLP)Approvals for the Land:Again the approvals will depend on the type of land sought. • For allotment of plot in an Industrial estate, approval from the Gujarat Industrial Development Corporation (GIDC) is required. • The District Collector shall approve any applications for allotment of Government Land. • Agricultural land can be purchased through negotiation for which no approval is required per se. For more info on Business setup visit Page |9 For Business setup queries email at or call at 011 40622239
  10. 10. Upcoming Business Summit International Indian Home Congress 2012 India’s first of its kind of show on Home Décor, Home furnishing, and Home Improvement Sector. • Auto Show India 2013 Date: - October 04, 2012 to October 05, 2012 Venue: - Hotel Claridges, Surajkund, Delhi/NCR Forthcoming Auto Industry related Events [Source:] Auto Show India 2013 With India emerging as a leading export hub for automobile companies and Sri Lanka coming up as a an important country for business opportunities in the automobile sector for India; this second edition of the Auto Show India organized by the Society of Indian Automobile Manufacturers aims to establish good relations with the Automotive market of Sri Lanka. The show will feature the latest vehicle models and it is hoped that this edition will see far more visitors than the last time. National Date: - January 04, 2013 to January 06, 2013 Venue: - Bandaranaike Memorial International Convention Hall (BMICH), • Indian Home Congress Colombo, Sri Lanka 2012 Bus & Utility Vehicles Show 2013 Considering the importance of buses in the country and the fact that the Indian bus industry is one of the largest in the world; SIAM is organizing the Bus & Utility Vehicles Show 2013. Given the situation when utility • Bus & Utility Vehicles vehicles are rapidly seeing a lot of takers whether it is an SUV or an MUV; Show 2013 this show will focus on showcasing the latest developments in the technology and provide a platform for manufacturers to launch their product and communicate with the prospective customers directly. This will help the manufacturers understand the requirements of the target audience better. • Motor Show Bangalore Date: - February 14, 2013 to February 17, 2013 Venue: - India Expo Mart, Greater Noida, Delhi-NCR, India 2013 Motor Show Bengalore 2013 A show first of its kind, it is being organized to help automobile manufacturers to present latest technology developments, innovations in designs and features, latest products, etc to prospective customers. It is not unknown that this city is the technology centre of India and one of the most financially sound cities too. With a large pool of young working population, Bangalore is definitely bound to benefit from the show. Date: - April 04, 2013 to April 07, 2013 Venue: - Bangalore International Exhibition Centre (BIEC), Bangalore For more info on Business setup visit P a g e | 10 For Business setup queries email at or call at 011 40622239
  11. 11. Contact Us Neha Seth Visit us at E: D: +91.11.40622239 A Venture of Shipra Paul D- 38, Ist Floor, South Extn. Part I New Delhi – E: 110049 D: +91.11.40622246 T: 40622200 F: 91.40622201 E: info@startbizindia.comDisclaimer:This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper havebeen developed for the new startups. The author and the Company expressly disclaim all and any liability to anyperson who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, oromitted to be done by any such person in reliance upon the contents of this paper. For more info on Business setup visit P a g e | 11 For Business setup queries email at or call at 011 40622239