Indian auto industry contributes approx 7.1% o the GDP of India. 31% of the small cars sold globally were manufactured in India (FY 2014-15). With approx. 20 million vehicles sold annually- auto industry has a great potential to engine Make In India. The presentation discusses about the market size, advantage, growth drivers, key segments , FDI & opportunities for Indian MSMEs in this sector.

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Automobile Industry
&
Make In India

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Automobile Industry In India

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Introduction
• One of the largest auto industries in the world,
the industry accounts for 7.1% of the country's
Gross Domestic Product (GDP).
• As of FY 2014-15, around 31% of small cars sold
globally are manufactured in India.
• Annual sales of 19.8 million vehicles in FY15 —
the auto industry is set to become the engine of
the government’s ‘Make in India’ initiative,
according to EY report.

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Market size
• The auto industry produced a total 19.84 million vehicles in April-January 2016
as against 19.64 million in April-January 2015.
• Domestic sales of Passenger Vehicles grew by 8.13% in April-January 2016 over
the same period last year.
• Within the Passenger Vehicles, Passenger Cars increased by 10.18%, during
April-January 2016 over April-January 2015.
• The domestic sales of Commercial Vehicles increased by 9.43% in April-January
2016 over the same period last year.
• Sale of Medium & Heavy Commercial Vehicles (M&HCVs) increased at 30.19%.
• India is also a prominent auto exporter and has strong export growth
expectations for the near future. In April-January 2016, exports of Commercial.
•Vehicles registered a growth of 18.36% over April-January 2015.

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Advantage India

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• LOW VEHICLE PENETRATION and
improving economic fundamentals
• HIGHER ANNUAL SALES: India saw an
annual sale of 19.8 million vehicles in FY15.
• FASTER GROWTH: India is also one of the
fastest growing auto markets, with
production of 23.4 million vehicles in FY15
and a leading position in several sub-
segments.
Salient Features

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Key Growth Drivers

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• REGULATORY ENVIRONMENT: A stable and supportive regulatory environment is
critical to drive growth.
• Cleaner transport: Advancement of BS VI norms, likely rollout of the 'End of life'
policy, FAME-India scheme
• Safer transport: Upcoming Road Transport and Safety bill, International Safety
Standards from 2017 ‘Make in India’ and the initiatives to improve the ease of doing
business.
• GST: Implementation would lead to reduction in logistics cost, lower tax burden on
vehicles, greater transparency, reduction in cost of doing business.
• FDI growth: A sharp turnaround in foreign direct investment was seen in the year
2014. After declining for two successive years, investment in India has bounced back
with 32% growth to $25 bn — significantly ahead of the 7% growth in FDI seen all
over the world
Drivers of the Industry

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Key Segments

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Passenger vehicles
• Passenger cars
• Utility vehicles
• Multi-purpose vehicles

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Two-wheelers
• Mopeds
• Scooters
• Motorcycles

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Three-wheelers
• Passenger carriers
• Goods carriers

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Commercial vehicles
• Light commercial vehicles
• Medium and heavy commercial vehicles.

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Huge demands for low-cost electric
vehicles that are suited for safe short-
distance urban commutes (averaging
50-100 km/trip) that are rugged enough
to perform reliably through India’s
summers and monsoon. It is estimated
that total electric vehicles sales would
amount to 6-7 Million units by 2020.
Electric vehicles

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FDI In The Sector

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Foreign Direct Investment
The industry has attracted Foreign Direct Investment (FDI) worth US$ 14.32 billion
during the period April 2000 to December 2015, according to data released by
Department of Industrial Policy and Promotion (DIPP).
Major Foreign Players in India include:
• Suzuki (Japan)
• Nissan (Japan)
• Piaggio (Italy)
• Volkswagen (Germany)
• Renault (France)
• Hyundai (South Korea)
• General Motors (USA)
• BMW (Germany)

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What 'Make In India' Has For The Industry

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Investment Opportunities
• Automobile manufacturing to become main driver of ‘Make in India’ as passenger
vehicles market expected to triple to 9.4 million units by 2026
• Separate and independent Department for Transport to be set up that will resolve
issues related to fuel technology, emission, exports and motor body specifications
• Formulation of a scheme for Faster Adoption and Manufacturing of Electric and
Hybrid Vehicles to promote affordable and efficient electric and hybrid vehicles in the
country
• The Automobile Mission Plan (AMP) 2006- 2016 designed by the government, aims to
accelerate and sustain growth in this sector

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Major Developments in the Sector

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Major Developments
Some of the major investments and developments in the automobile sector in India are as
follows:
• Japanese two-wheeler manufacturer Honda Motorcycle and Scooter India (HMSI) has
opened its fourth and world’s largest scooter plant in Gujarat, set up to initially produce
600,000 scooters per annum to be scaled up to 1.2 million scooters per annum by mid-2016.
• American car maker Ford has unveiled its iconic Ford Mustang in India and will make its
debut in second quarter of FY2016 within the price band of Rs 45 lakh (US$ 66,146) and Rs 50
lakh (US$ 73,496) in the Indian market.
• Nissan Motor Co. Ltd is in discussion with Government of India to bring electric and hybrid
technologies to India as the government plans to reduce air pollution caused by vehicles.
• Global auto major Ford plans to manufacture in India two families of engines by 2017, a 2.2
litre diesel engine codenamed Panther, and a 1.2 litre petrol engine codenamed Dragon,
which are expected to power 270,000 Ford vehicles globally.

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Major Developments (Cont.)
• The world’s largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and
Toyoda Gosei Co are setting up plants and increasing capacity in India.
• General Motors plans to invest US$ 1 billion in India by 2020, mainly to increase the capacity
at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.
• US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$ 513.5 million) in
Maharashtra, to manufacture Jeep Grand Cherokee model.
• Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has
doubled its India assembly capacity to 20,000 units per annum.
• Germany-based luxury car maker Bayerische Motoren Werke AG’s (BMW) local unit has
announced to procure components from seven India-based auto parts makers.
• Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based
Peugeot Motorcycles (PMTC).

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Conclusion

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The Final Word
The Indian automotive sector has the potential to generate up to US$ 300 billion in
annual revenue by 2026, create 65 million additional jobs and contribute over 12 per
cent to India’s Gross Domestic Product, as per the Automotive Mission Plan 2016-26
prepared jointly by the Society of Indian Automobile Manufacturers (SIAM) and
government.

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