Indian automobile industry, growth, challenges, opportunities

1. Indian Automobile Industry
Growth, Challenges &
Opportunities
Shailendra Tomar

2. Agenda
 Automotive Clusters in India
 Market Share of Passenger Vehicles
 Passenger Vehicles Production
 Major Developments & Investments
 India will drive production growth
 Strong future in B segment
 India’s Demographic Dividend
 Export Hub
 Supplier Footprints
 Auto Component
 Challenges in India
 Government Initiatives
 Opportunities for Global Leverage
 Key Automotive Trends
 Expected changes and barriers

3. Automotive Clusters in India
India’s automotive endowment is located in four major industrial areas
spread across the country

4. Market Share of Passenger Vehicles
Models Dec 2013
Alto 23,823
Swift 16,788
Dzire 15,427
Wagon R 12,154
Grand i10 9,077
Bolero 8,465
Omni 5,590
Eon 5,428
Ertiga 4,924
Innova 4,918
Source: SIAM Reports Dec 2013

5. Passenger Vehicles Production
• The passenger vehicles production in India touched 3.23 million units in 2012–13 and is expected to reach
10 million units by 2020–21
• The industry is estimated to grow at a CAGR of 13 per cent during 2012–2021
• The industry recorded exports worth US$ 9.3 billion in 2012–13 and is projected to touch US$ 30 billion by
2020–21
Figures for Financial Year – April to
March (*Estimates)

6. Major Developments & Investments
 Tata Motors Ltd plans to invest about £30 million in the National Automotive Innovation Campus (NAIC) for
research and development (R&D).
 Volvo India plans to set up truck and bus manufacturing facility in Malur, Karnataka, with an investment of
US$ 158.32 million.
 JBM Auto has formed a joint venture (JV) with BredaMenarinibus to manufacture luxury buses in India.
They will set up a plant near Faridabad, Haryana, with at an investment of US$ 81.2
 Mahindra will develop the world's first hybrid technology that can be deployed in vehicles with manual
transmission and enhance fuel efficiency by ~20%.
 Jaguar Land Rover (JLR) will build a manufacturing plant in Rio de Janeiro, Brazil with an investment of
US$ 751.95 million.
 Amtek Auto has signed an agreement to buy Kuepper Group, Germany for about €200 million in its
second big European acquisition in 2013.
 Honda Cars India will use the Ennore Port to export cars to South Africa. The infrastructure for car exports
at Ennore Port is attractive and cost effective.

7. With regards to the Asian scope, China and India
will drive production growth

8. Indian automotive market will enjoy strong growth
in all segment – B segment overperform
Production evolution by segment
[PC + LCV ;m vehicles]
CAGR
(10-15)
19,8%
11,5%
5,4%
11,3%
12,6%
16,6%
14,0%
33%
LCV
A
B
C
D
E+
MPV/SUV
Value [Bn€]
22,91
12%
32%
21%
10%
2% 2%
21%
Production value
breakdown by segment
[2010; PC + LCV; Bn
EUR]
17% 19% 17%
49% 45%
40%
19%
24%
14%
7%
12%
LCV
A
B
C
D
E+
MPV/SUV
2015
6,18
6%
1%
11%
2010
3,21
7%
9%
2007
1,96
17,8%
CAGR
Vehicle value
[2010; kEUR;
VAT excl.]
5
8
10
40
80
16
5

9. India’s Demographic Dividend

10. India’s Demographic Dividend
Implications for Auto Industry
 The Indian automotive industry is expected to be the world’s third largest market by 2030, only
behind China and the US
 India is estimated to become the fifth-largest Personal Vehicle producer in the world by 2014
 With the establishment of more R&D centres, likely to be more product development initiatives
from India
 Much greater segmentation of the market
 Entry level vehicles
 Need for premium travel options, SUVs for camping, off-road vehicles

11. Export Hub
Polo

12. Auto Component
Supplier Footprints

13. Auto Component
Growth

14. Auto Component
Tier 1 Suppliers

15. Challenges in India

16. Challenges in India
Beyond the Indian Heroes
India is at an inflexion point in terms of automotive growth
Suppliers must scale up in about 1/3 of the time vs.
China
Challenges with many (in particular, Tier II, Tier III)
suppliers abound
− R&D capability
− Quality understanding (despite certification)
− Process competence (project management, quality and
production process systems, etc.)
− Root cause analysis and execution of necessary measures
− Systematic testing despite clear customer expectations
− Eliminate the symptom, don't solve the problem

17. Government Initiatives
 Government to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume
less petrol or diesel
 The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been
extended up to March 31, 2015.
 An increase in excise duty from 27 to 30% has been allowed for SUVs with engine capacity exceeding
1,500 cc.
 The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14% to 13%.
 Government allows 100% FDI in the automotive industry through automatic route.

18. Government Initiatives
Road Ahead
The cumulative
foreign direct
investment (FDI)
inflows into the
Indian automobile
industry during
April 2000 to
October 2013 was
recorded at US$
9,079 million,
amounting to 4 per
cent of the total FDI
inflows

19. Opportunities for Global Leverage

20. Key Automotive Trends

21. Expected changes in market conditions and barriers
21
In India, respondents expect a decrease in all trade barriers, and in Brazil and Russia, import export/duties and governmental
interventions are forecast to ease.