The document provides an overview of the Indian automobile industry, which manufactures over 11 million vehicles per year. It discusses key statistics such as production and export figures as well as segmentation of the market into segments like passenger vehicles, commercial vehicles, and two-wheelers. The automobile supply chain in India is also examined, with details provided on the roles of tier 1, 2, and 3 suppliers in delivering components to automakers.

1. PRESENTED BY:
AMIT KUMAR
ASHISH RANJAN
CHANRASHEKHAR
CHANDRAMANI
SHWETA KUMARI
YASHASVI GOJA

2. OVERVIEW
 The Indian Automobile Industry manufactures over 11
million vehicles and exports about 1.5 million each year.
 The dominant products of the industry are two-wheelers
with a market share of over 75% and passenger cars with
a market share of about 16%.
 Commercial vehicles and three-wheelers share about 9%
of the market between them. About 91% of the vehicles
sold are used by households and only about 9% for
commercial purposes.
 The industry has a turnover of more than USD $35 billion
and provides direct and indirect employment to over 13
million people.

3.  The supply chain is similar to the supply chain of the
automotive industry in Europe and America.
 Interestingly, the level of trade exports in this sector in
India has been medium and imports have been low.
However, this is rapidly changing and both exports
and imports are increasing.
 With a high cost of developing production
facilities, limited accessibility to new technology, and
increasing competition, the barriers to enter the Indian
Automotive sector are high.
 India has a well-developed tax structure. The power to
levy taxes and duties is distributed among the three
tiers of Government. The cost structure of the industry
is fairly traditional, but the profitability of motor
vehicle manufacturers has been rising over the past
five years.

4.  Tata Motors is leading the commercial vehicle segment
with a market share of about 64%. Maruti Suzuki is
leading the passenger vehicle segment with a market
share of 46%. Hyundai Motor India Limited and
Mahindra and Mahindra are focusing expanding their
footprint in the overseas market. Hero MotoCorp is
occupying over 41% and sharing 26% of the two-
wheeler market in India with Bajaj Auto. Bajaj Auto in
itself is occupying about 58% of the three-wheeler
market.
 Over the past few years, the industry has been volatile.
Currently, India's increasing per capita disposable
income which is expected to rise by 106% by 2015 and
growth in exports is playing a major role in the rise and
competitiveness of the industry.
 The level of technology change in the Motor vehicle
Industry has been high but, the rate of change in
technology has been medium. Investment in the
technology by the producers has been high.

5.  The key to success in the industry is to improve labour
productivity, labour flexibility, and capital efficiency. Having
quality manpower, infrastructure improvements, and raw
material availability also play a major role. Access to latest
and most efficient technology and techniques will bring
competitive advantage to the major players.
 The role of Industry is and will primarily be in designing and
manufacturing products of world-class quality establishing
cost competitiveness and improving productivity in labour
and in capital. With a combined effort, the Indian Automotive
industry will emerge as the destination of choice in the
world for design and manufacturing of automobiles .
 The Indian market offers endless possibilities for investors.

6. HISTORY
 The first car ran on India's roads in 1897. Until the
1930s, cars were imported directly, but in very small
numbers.
 Embryonic automotive industry emerged in India in the
1940s. Mahindra & Mahindra was established by two
brothers as a trading company in 1945, and began assembly
of Jeep CJ-3A utility vehicles under license from Willys. The
company soon branched out into the manufacture of light
commercial vehicles (LCVs) and agricultural tractors.
 Following the independence, in 1947, the Government of
India and the private sector launched efforts to create an
automotive component manufacturing industry to supply to
the automobile industry. However, the growth was relatively
slow in the 1950s and 1960s due to nationalisation and the
license raj which hampered the Indian private sector.

7.  After 1970 the automotive industry started to grow, but
the growth was mainly driven by tractors, commercial
vehicles and scooters. Cars were still a major luxury.
Japanese manufacturers entered the Indian market
ultimately leading to the establishment of Maruti Udyog.
 In the 1980, a number of Japanese manufacturers
launched joint-ventures for building motorcycles and
light commercial-vehicles. It was at this time that the
Indian government chose Suzuki for its joint-venture to
manufacture small cars.
 Following the economic liberalisation in 1991 and the
gradual weakening of the license raj, a number of Indian
and multi-national car companies launched operations.
Since then, automotive component and automobile
manufacturing growth has accelerated to meet domestic
and export demands.

8.  Economic liberalization in India in 1991, the Indian
automotive industry has demonstrated sustained growth as
a result of increased competitiveness and relaxed
restrictions.
 Several Indian automobile manufacturers such as Tata
Motors, Maruti Suzuki and Mahindra and
Mahindra, expanded their domestic and international
operations. India's robust economic growth led to the
further expansion of its domestic automobile market which
has attracted significant India-specific investment by
multinational automobile manufacturers.
 In February 2009, monthly sales of passenger cars in India
exceeded 100,000 units and has since grown rapidly to a
record monthly high of 182,992 units in October 2009.
 From 2003 to 2010, car sales in India have progressed at a
CAGR of 13.7%, and with only 10% of Indian households
owning a car in 2009
 SIAM is the apex industry body representing all the vehicle
manufacturers, home-grown and international, in India.

9. INDUSTRY DEFINATION
 This class consists of units mainly engaged in
manufacturing motor vehicles or motor vehicle engines.
 The primary activities of this industry are: Motor cars
manufacturing Motor vehicle engine manufacturing
 The major products and services in this industry are:
Passenger motor vehicle manufacturing segment
(Passenger Cars, Utility Vehicles & Multi Purpose Vehicles)
Commercial Vehicles (Medium & Heavy and Light
Commercial Vehicles) Two Wheelers Three Wheelers.
 Supply Chain of Automobile Industry: The supply chain of
automotive industry in India is very similar to the supply
chain of the automotive industry in Europe and America. The
orders of the industry arise from the bottom of the supply
chain i. e., from the consumers and goes through the
automakers and climbs up until the third tier suppliers.

10. CHANGES IN INDIAN AUTOMOBILE
INDUSTRY SUPPLY CHAIN SYSTEM:
 Supply Chain of Automobile Industry: The supply chain of
automotive industry in India is now very similar to the supply
chain of the automotive industry in Europe and America.
 The orders of the industry arise from the bottom of the supply
chain i.e, from the consumers and goes through the
automakers and climbs up until the third tier suppliers.
 Main components of achieving this supply chain system are:
 Third Tier Suppliers.
 Second Tier Suppliers.
 First Tier Suppliers.

11. Role of each of the contributors to the
supply chain are discussed below:-
 Third Tier Suppliers: These companies provide basic products
like rubber, glass, steel, plastic and aluminium to the second
tier suppliers.
 Second Tier Suppliers: These companies design vehicle
systems or bodies for First Tier Suppliers and OEMs. They work
on designs provided by the first tier suppliers or OEMs. They
also provide engineering resources for detailed designs. Some
of their services may include
welding, fabrication, shearing, bending etc.
 First Tier Suppliers: These companies provide major systems
directly to assemblers. These companies have global coverage
to follow their customers to various locations around the world.
They design and innovate to provide "black-box" solutions for
the requirements of their customers. Black-box solutions are
solutions created by suppliers using their own technology to
meet the performance and interface requirements set by
assemblers.

12.  First tier suppliers are responsible not only for the
assembly of parts into complete units like
dashboard, brakes-axle-suspension, seats, or cockpit but
also for the management of second-tier suppliers.
 Automakers/Vehicle Manufacturers/Original Equipment
Manufacturers (OEMs): After researching consumers'
wants and needs, automakers begin designing models
which are tailored to consumers' demands. The design
process normally takes five years. These companies have
manufacturing units where engines are manufactured and
parts supplied by first tier suppliers and second tier
suppliers are assembled. Automakers are the key to the
supply chain of the automotive industry. Examples of
these companies are Tata Motors, Maruti
Suzuki, Toyota, and Honda. Innovation, design capability
and branding are the main focus of these companies.

13.  Dealers: Once the vehicles are ready they are shipped to
the regional branch and from there, to the authorised
dealers of the companies. The dealers then sell the
vehicles to the end customers.
 Parts and Accessory: These companies provide products
like tires, windshields, and air bags etc. to automakers
and dealers or directly to customers.
 Service Providers: Some of the services to the customers
include servicing of vehicles, repairing parts, or financing
of vehicles. Many dealers provide these services
but, customers can also choose to go to independent
service providers.

14. KEY STATISTICS OF THE INDUSTRY:
1.The production of automobiles has greatly increased in the last
decade. It passed the 1 million mark during 2003-2004 and has more
than doubled since
Total Vehicles
Year Car Production % Change Commercial % Change % Change
Prodn.
2011 3,038,332 7.3 888,185 22.42 3,926,517 10.4
2010 2,831,542 30.17 725,531 55.58 3,557,073 34.7
2009 2,175,220 17.83 466,330 -4.10 2,641,550 13.25
2008 1,846,051 7.74 486,277 -9.99 2,332,328 3.35
2007 1,713,479 16.33 540,250 -1.20 2,253,999 10.39
2006 1,473,000 16.53 546,808 50.74 2,019,808 19.36
2005 1,264,000 7.27 362,755 9.00 1,628,755 7.22
2004 1,178,354 29.78 332,803 31.25 1,511,157 23.13
2003 907,968 28.98 253,555 32.86 1,161,523 22.96
2002 703,948 7.55 190,848 19.24 894,796 8.96
2001 654,557 26.37 160,054 -43.52 814,611 1.62
2000 517,957 -2.85 283,403 -0.58 801,360 -2.10
1999 533,149 285,044 818193

15. 2. AUTOMOBILE PRODUCTION
Type of Vehicle 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
Passenger
1,209,876 1,309,300 1,545,223 1,777,583 1,838,697 2,357,411 2,987,296
Vehicles
Commercial
353,703 391,083 519,982 549,006 417,126 567,556 752,735
Vehicles
Three Wheeler 374,445 434,423 556,126 500,660 501,030 619,194 799,553
Two Wheelers 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626 10,512,903 13,376,451
Total. 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479 14,057,064 17,916,035

16. 3.YEAR WISE GROWTH OVERALL
Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Motor Vehicle
8,467,853 9,743,503 11,087,997 10,853,930 11,175,479
Production[
Industry Revenue USD
24,379 26,969 30,507 32,383 33,342*
Million[
Exports (Units)[ 629,544 806,222 1,011,529 1,238,333 1,530,660
Exports (Revenue) 1,915 2,231 2,552 3,008 3,718*

17. PRODUCT AND SERVICE
SEGMENTATION:
 The automotive industry of India is categorised into
passenger cars, two-wheelers, commercial vehicles and
three-wheelers, with two-wheelers dominating the market.
 More than 75% of the vehicles sold are two-wheelers. Nearly
59% of these two-wheelers sold were motorcycles and about
12% were scooters. Mopeds occupy a small portion in the
two-wheeler market however; electric two-wheelers are yet
to penetrate.
 The passenger vehicles are further categorised into
passenger cars, utility vehicles and multi-purpose vehicles.
All sedan, hatchback, station wagon and sports cars fall
under passenger cars.

18.  Multi-purpose vehicles or people-carriers are similar in
shape to a van and are taller than a sedan, hatchback or a
station wagon, and are designed for maximum interior
room.
 Utility vehicles are designed for specific tasks. The
passenger vehicles manufacturing account for about 15%
of the market in India.
 Commercial vehicles are categorised into heavy, medium
and light. They account for about 5% of the market.
Three-wheelers are categorised into passenger carriers
and goods carriers. Three-wheelers account for about 4%
of the market in India.
 Many services were introduced by automobile company
are :
1. Maintaince servicing.
2. Vehicle Insurance.
3. Vehicle finance schemes.
4. Test drive.

19. GROWTH OF AUTMOBILE
INDUSTRY SEGMENT WISE:-
Segment 2003-04 2004-05 2005-06 2006-07 2007-08
Passenger Car(%) 10.22 10.39 9.91 10.65 12.42
Utility Vehicles (UVs) (%) 2.15 2.23 2.18 2.18 2.39
Multi Purpose Vehicles (MPVs) (%) 0.87 0.82 0.75 0.82 0.98
Total Passenger Vehicles[ (%) 13.25 13.44 12.83 13.65 15.79
Passenger Carriers (%) 0.36 0.32 0.32 0.28 0.43
Goods Carriers (%) 2.01 2.19 2.01 2.44 2.10
Total Medium & Heavy Commercial Vehicles
2.37 2.51 2.33 2.73 2.53
(%)
Passenger Carriers (%) 0.28 0.25 0.25 0.24 0.32
Goods Carriers (%) 1.17 1.27 1.36 1.67 1.77
Total Light Commercial Vehicles (%) 1.45 1.52 1.61 1.90 2.10
Total Commercial Vehicles (%) 3.82 4.03 3.94 4.63 4.63
Passenger Carriers (%) 2.56 2.17 2.39 2.34 2.51
Goods Carriers (%) 1.61 1.73 1.65 1.65 1.51
Total Three Wheelers (%) 4.17 3.90 4.04 4.00 4.01
Scoters/Scooterettee (%) 13.01 11.68 10.21 9.31 11.57
Motorcycles/Step-Throughs (%) 61.24 62.86 65.24 64.83 59.35
Mopeds (%) 4.52 4.08 3.74 3.52 4.47
Electric Two Wheelers (%) - - - 0.07 0.19
Total Two Wheelers (%) 78.76 78.63 79.18 77.73 75.57
Grand Total(%) 100.00 100.00 100.00 100.00 100.00

20. INDIAN AUTOMOBILE INDUSTRY
VOLATILTY:-
 The level of volatility is medium.
 Over the past few years, the Motor Vehicle Manufacturing
industry has become more volatile. This has been the
result of fluctuations in metal prices and fuel prices, as
well as changes in legislation and assistance packages.
 India's increasing per capita disposable income and
growth in exports is playing a major role in the rise and
the competitiveness of the industry.
 According to the Economic Times of India, economic
liberalization – allowing unrestricted Foreign Direct
Investment (FDI) and removing foreign currency
neutralisation and export obligations – has been also
been one of the key to India's automotive volatility.

21. INDIAN AUTOMOBILE MARKET
CHARACTERSTICS:-
 The Indian Automotive Industry after de-licensing in July
1991 has grown at a spectacular rate on an average of
17% for last few years.
 The industry has attained a turnover of USD $35.8
billion, (INR 165,000 crores) and an investment of USD
10.9 billion.
 The industry has provided direct and indirect
employment to 13.1 million people. Automobile industry
is currently contributing about 5% of the total GDP of
India.
 The projected size in 2016 of the Indian automotive
industry varies between $122 billion and $159 billion
including USD 35 billion in exports. This translates into a
contribution of 10% to 11% towards India's GDP by
2016, which is more than double the current contribution.

22. INDIAN AUTOMBILE INDUSTRY
DEMAND DETERMINANTS:-
 Determinants of demand for this industry include vehicle
prices (which are determined largely by wage, material
and equipment costs) and exchange
rates, preferences, the running cost of a vehicle (mainly
determined by the price of petrol), income, interest
rates, scrapping rates, and product innovation.
 Exchange Rate: Movement in the value of Rupee
determines the attractiveness of Indian products
overseas and the price of import for domestic
consumption.
 Affordability: Movement in income determine the
affordability of new motor vehicles. Allowing unrestricted
Foreign Direct Investment (FDI) led to increase in
competition in the domestic market hence, making better
vehicles available at affordable prices.

23.  Product Innovation is an important determinant as it
allows better models to be available each year and also
encourages manufacturing of environmental friendly
cars.
 Demographics: It is evident that high population of India
has been one of the major reasons for large size of
automobile industry in India. Factors that may be
augment demand include rising population and an
increasing proportion of young persons in the population
that will be more inclined to use and replace cars. Also,
increase in people with lesser dependency on traditional
single family income structure is likely to add value to
vehicle demand.
 Infrastructure: Longer-term determinants of demand
include development in Indian's infrastructure. India
needs about $500 billion to repair its infrastructure such
as ports, roads, and power units. These investments have
been made with an aim to generate long-term cash flow
from automobile, power, and telecom industries.

24. INDIAN AUTOMOBILE INDUSTRY
INTERNATIONAL MARKET STATUS:
 The Indian automotive industry embarked a new journey in 1991
with de-licensing of the sector and subsequent opening up for
100% foreign direct investment (FDI).
 Since then almost all global majors have set up their facilities in
Indian taking the level of production from 2 million in 1991 to over
10 million in recent years.
 The exports in automotive sector have grown on an average
compound annual growth rate of 30% per year for the last seven
years. The export earnings from this sector are over USD 6 billion.
 Even with this rapid growth, the Indian automotive industry's
contribution in global terms is very low. This is evident from the
fact that even thought passenger and commercial vehicles have
crossed the production figures of 2.3 million in the year 2008, yet
India's share is about 3.28% of world production of 70.53 million
passenger and commercial vehicles. India's automotive exports
constitute only about 0.3% of global automotive trade.

25. INDIAN AUTOMOBILE INDUSTRY
TRYING FOR:-
 The automobile industry has defined its target in the
Automotive Mission Plan as To emerge as the destination of
choice in the world for design and manufacture of
automobiles with output reaching a level of USD 145 billion
accounting more than 10% of GDP and providing additional
employment to 25 million people by 2016.
 In order to achieve these goals the following key
recommendations have been made in the Automotive
Mission Plan to the Indian Government and Industry:-
 Manufacturing and export of small cars, multi-utility
vehicles, two- and three-wheelers, tractors, components to
be promoted Care to be taken of negative like and rules of
the country with current negotiation of Free Trade
Agreement and Regional Trade agreement with countries
like Thailand, Singapore, Malaysia, China, Korea, Egypt, Gulf
etc.

26.  Trying to adapt a Attractive Tariff Policy which may follow
attractive investment. Specific measures will be taken for
expansion of domestic market. Incremental investment of
USD 35 to 40 billion to Automotive Industry during the
next 10 years.
 National level Automotive Institute for training on
automobile at International Training Institutes (ITIs) and
Automotive Training Institute (ATIs) to be set up.
 An Auto Design Centre to be established at National
Institute of Design, Ahmadabad. National Automotive
Testing and R&D Implementation Project (NATRIP) to act
as Centre of Excellence for Technical Design Data.
 The profitability of motor vehicle manufacturers has been
rising over the past five years, mainly due to rising
demand and growth of Indian middle class and industry
is trying to continue it by focusing on this segment.

27. EMMISION NORMS CHANGES
 In tune with international standards to reduce vehicular
pollution, the central government unveiled the standards
titled 'India 2000' in 2000 with later upgraded guidelines as
'Bharat Stage'.
 These standards are quite similar to the more stringent
European standards and have been traditionally
implemented in a phased manner, with the latest upgrade
getting implemented in 13 cities and later, in the rest of the
nation.
 Delhi(NCR), Mumbai, Kolkata, Chennai, Bangalore, Hyderaba
d, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and
Agra are the 13 cities where Bharat Stage IV has been
imposed while the rest of the nation is still under Bharat
Stage III.
 These changes were very effective for indian automobile
industry to meet with international standards and and thse
standards of international market.

28. LANDMARK OF INDIAN
AUTOMOBILE INDUSTRY:
 1897 First Person to own a car in India - Mr Foster
of M/sCrompton Greaves Company, Mumbai.
 1901 First Indian to own a car in India - Jamsetji Tata.
 1905 First Woman to drive a car in India - Mrs.Suzanne
RD Tata.
 1905 Fiat Motors.
 1911 First Taxi in India.
 1924 Formation of traffic police.
 1928 Chevrolet Motors.
 1942 Hindustan Motors.
 1944 Premier Automobiles Limited.

29.  1945 Tata Motors.  1995 Daewoo Motors.
 1947 Mahindra & Mahindra  1995 REVA Electric Car
Limited. Company.
 1948 Ashok Motors.  1996Hyundai Motor Company.
 1948 Standard Motors.  1997 Toyota KirloskarMotors.
 1974 Sipani Motors.  1997FiatMotors (Re-Entry).
 1981 Maruti Suzuki.  1998 San Motors.
 1994 Rover Company.  1998Mitsubishi Motors.
 1994 Mercedes-Benz.  2001 skoda Auto.
 1994 General Motors India-  2003 General Motors India-
Opel brand launch. Chevrolet brand launch.
 1995 Ford Motor Company.  2005 BMW.
 1995 Honda Siel Cars  2007 Audi.
India.  2009Land Rover and Jaguar.

30. INDIAN AUTOBILE INDUSTRY
KEY COMPETITORS:-
 Tata Motors: Market Share: Commercial Vehicles
63.94%, Passenger Vehicles 16.45%.
 Maruti Suzuki India :Market Share: Passenger Vehicles
46.07%.
 Hyundai Motor India :Market Share: Passenger Vehicles
14.15%
 Mahindra & Mahindra: Market Share: Commercial
Vehicles 10.01%, Passenger Vehicles 6.50%, Three
Wheelers 1.31%.
 Ashok Leyland: Market Share: Commercial Vehicles 22%.
 Hero MotoCorp is occupying over 41% and sharing
26% of the two-wheeler market in India with Bajaj Auto.
Bajaj Auto in itself is occupying about 58% of the

31. FUTURE EXPECTED GROWTH:
 The government spending on infrastructure in roads and
airports and higher GDP growth in the future will benefit
the auto sector in general. We expect a slew of launches
in the Segment 'B' and Segment 'C' of passenger cars.
Utility vehicle segment is expected to grow at around 8%
to 9% in the long-term.
 In the 2-wheeler segment, motorcycles are expected to
witness a flurry of new model launches. Though the
market size is expected to grow by 10% to 12%,
competitive pressure could keep prices and margins
under control. TVS, Honda and Hero Motocorp are poised
to benefit from higher demand for ungeared scooters in
the urban and rural markets.

32.  Riding the wave of structural changes taking place in the
country, the tractor industry registered good growth in
FY10 as well as FY11. he strong performance continued
in FY11 as well as volumes grew by 20%. While good
monsoon is a positive for the sector, given the fact that
non-farm incomes have continued to climb up, volumes
should still hold up pretty well despite a year or two of
poor monsoons. The longer-term picture is impressive in
light of poor mechanisation levels in the country’s farm
sector and the thrust of the government on improving
rural infrastructure.
 With an estimated 40% of CVs plying on the roads being
10 years old, demand for HCVs is expected to grow by 7%
to 8% over the long term. While the industry is going
through cyclical hiccups currently, we expect this factor
to weaken in the future on account of strong structural
tailwinds. The privatisation of select state transport
undertakings bodes well for the bus segment.

33. CHANGES WITNESSED:
 End of licensee raj 1991 (DE licensing).
 An amazing gear up in competition.
 Technological up gradation.
 Customer oriented market development.
 Increased service facility's.
 Development & growth of oil company's with automobile
company's in parallel way.
 Development & growth of infrastructure company's with
automobile company's in indirect way.
 Formation of traffic police and increased road
safetymeasures

34. DRIVE SAFE
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