The Indian auto-component industry has grown at 20% annually since 2000 and is projected to maintain 15-20% growth until 2015. The industry's growth was driven by the liberalization policy of the 1990s that attracted foreign auto majors and forced localization of supply chains. Today the domestic industry supplies 87% of the needs of automobile manufacturers in India. However, the industry faces weaknesses like low productivity, high costs, and low investment in R&D. To compete globally, Indian component makers will need to focus on areas of strength like small cars and leverage India's competitive manufacturing costs and proximity to export markets.

1. Indian auto-component industry
Presenting by:
Sangam Lalsivaraju-138
Dheeraj singh-169
Swati mathur-146
Manu pawar-147
Parmod singh-133
Surin gandhi-189

2. Introduction
• The auto component companies in India are contributing to the growth of
this sector by providing genuine , cheap and reasonably priced automotive
parts.
• The industry growth was particularly visible in the exports of auto
components.
• The CAGR of the auto component exports in the five years clocked 27.5%
during 1998-2003.
• According to Forst & Sullivan, Indian auto component exports were to
touch US$1.11 billion in 2004-a 38.8% surge from the previous year as
against $578 million in 2002.
• The Indian auto component sector has been growing at 20 per cent ayear
since 2000 and is projected to maintain the high-growth phaseof 15-20
per cent till 2015

3. The Growth Journey

4. MUL indigenization
• The onset of India's liberalization policy and the subsequent arrival of
foreign auto majors came as a shot-in-the-arm for the Indian auto
component industry.
• This forced MUL to indigenize its component suppliers rather than
importing them , Maruti’s decision to localize its content was not only
because of government’s policy but also due to the cost effectiveness of
local content.
• New entrants found it difficult to compete with maruti’s pricing, as it had
already achieved 90% indigenization and had written off its initial capital
investment.
• The entry of foreign auto component markers, force the domestic
manufacturers to improve the quality.
• The domestic auto component industry contributed 87% of the needs of the
automobile sector, while the rest was imported.

5. Composition of production
Segment %
%
Electrical part 7
Electrical part
7 Equipments 8
8 Equipments
36
11 Suspension & braking parts Suspension & 11
braking parts
Drive & transmission steering parts
Drive & transmission 23
23 Engine parts steering parts
23 others Engine parts 23
others 36

6. Class segregation
• Three divisions are:
1.MNC’s that operate with wholly owned
subsidiaries or through units where they held the
controlling stake. E.g.: Delphi & Visteon, Denso
India & MICO.
2.Owned by Indian promoters/public with a
minority stake of foreign collaborators.
3.Wholly owned by Indian promoters/public.
Sundaram Brake Linings(SBL) & Sundaram
Fasteners Limited(SFL)

7. SWOT
Strengths: Weaknesses
1. Large domestic market 1.Low labour productivity
2. Sustainable labour cost advantage 2.High interest costs and highoverheads
3. Competitive auto component vendor base make the production uncompetitive
4. Government incentives for manufacturing 3.Various forms of taxes push up the cost
of plants production
5. Strong engineering skills in design etc 4.Low investment in Research and
development
5.Infrastructure bottleneck
Opportunities: Threats:
1. Commercial vehicles: SC ban on overloading 1.Rising input costs
2. Heavy thrust on mining and construction activity 2.Rising interest rates
3. Increase in the income level 3.Cut throat competition
4. Cut in excise duties
5. Rising rural demand

8. PEST
Political: Economical:
1. Environmental regulationand protection 1. Economic growth
2. Taxation 2. Monetary policy
3. International trade regulation 3. Government spending on research
4. Consumer protection 4. Policy towards unemployment
5. Employment law 5.Taxation
6. Government organization /attitude 6.Exchange rates
7. Competition regulation 7.Inflation
8.Stage of business cycle
Social: Technological:
1. Income distribution 1. Government spending on research
2. Demographics 2.Government and industry focus on tech’ effort
3. Labour/social mobility 3. New discoveries and development
4. Life style changes 4. Speed of technology transfer
5. Attitudes to work and leisure 5. Changes in material sciences
6. Education 6. Impact of changes in Information technology
7. Fashions and fads 7.Internet
8. Health & welfare
9. Living conditions

9. Porter’s model
Threat of new entry: Competitive rivalry:
1. Time and cost of entry 1.Number of competitors
2. Specialist knowledge 2.Quality difference
3. Economics of scale 3.Customer loyalty
4. Barriers to entry 4.Cost of leaving market
5. Technology protection
Threat of substitute: Buyer’s power:
1. Substitute performance 1.Number of customers
2. Cost of change 2.Price sensitivity
3.size of each order
Supplier’s power:
1. Number of suppliers
2. Size of supplies
3. Uniqueness of service

10. Proven product developmental
Stable economic policies
capabilities
•
Export potential
India as an
automotive High quality
hub standards
Large and growing
domestic demand
Competitive
manufacturing costs
Availability of Proximity to markets
manpower

11. Strategies to compete
1. One obvious way for the Indian manufacturers to compete in the global export
markets is to focus on their current areas of strength . As the industry continues
to grow with new export orders from automakers some strategies that Indian
manufacturers can adopt to gain success in these markets.
2. Manufacture and export of small cars, Multi Utility Vehicles (MUV), two &three
wheelers, tractors, components should be further promoted in lieu of the
current export trends.
3. Appropriate Tariff Policy should be followed to attract further investments in the
Automobile Sector.
4. Measures should be taken to expand the domestic market.
5. Exports should be more encouraged.
6. Policy initiatives for competitiveness and development of technology should be
taken.
7. Infrastructure development around identified automotive clusters should be
undertaken.
8. Emphasis should be on more product innovation and Value added services as the
current customer demands better products and services aggressively

12. THANK YOU