The document provides an overview of India's automotive sector as of November 2010. It notes that vehicle ownership in India is still very low, with only 1% of households owning a car and 10% owning a motorbike, indicating significant potential for growth. It also discusses trends in total vehicle sales and by vehicle type. Passenger vehicle and motorcycle sales are growing the fastest but motorcycles still dominate the market. The largest car manufacturers hold over 80% of the car market. Most foreign manufacturers have set up assembly plants to import vehicle kits and parts due to high import duties on fully built vehicles. The document identifies major automotive industry clusters and considerations for foreign parts suppliers entering the Indian market.

1. InAlliance Consulting | www.inalliance.eu
Indian automotive sector
snapshot
18th
November 2010
| Version : IA_auto_sector_V3.3 | Click here for latest updates

2. India's Automotive sector snapshot | Nov. 2010 | 2InAlliance Consulting | www.inalliance.eu
Private vehicles market potential
No vehicle
Car
Motorbike
Bicycle
Vehicle ownership in India, 2010
Compiled from various sources
Only 1 % of Indian
households own a
private car,
10 % a motorbike
Very low saturation, coupled with high disposable income growth and distribution, point to a large potential for private vehicles.
200820072006200520042003200220012000
400
600
800
1000
1200
GDP (US$), India, 1990-2008
Source : United Nations
• 83000 millionaires (in USD) in India in 2009, up 20% from 2008
• India's growth expected to overtake China's before 2015
• Per capita income expected to overtake UK, US, by 2040
CAGR :
12.1 %
1985 1995 2005 2015 2025
« Globals » : > € 80k
« Strivers » : € 40k - 80k
« Seekers » : € 15k - 40k
« Aspirers » : € 7k - 15k
« Deprived » : < € 7k
Household annual income,
2010, PPPPopulation in income bracket

3. India's Automotive sector snapshot | Nov. 2010 | 3InAlliance Consulting | www.inalliance.eu
Trends, vehicle type distribution
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
0
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
12 000 000
14 000 000
Total vehicles sales - India
Source : SIAM, November 2010
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
Passenger vehicles sales trends - India
Source : SIAM, November 2010
Passenger Vehicles
1 949 776
Commercial Vehicles
531 195
Three Wheelers
440 368
Two Wheelers
9 371 231
Sales by vehicle type - India - FY 2009-2010
Source : SIAM, November 2010
CAGR :
13.7%
CAGR :
10.3%
The Indian automotive sector has witnessed
healthy growth for the past 7 years, and the
industry considers this to be sustainable for
another 10 years at least.
Car sales grow faster thant other categories,
but motorcycles still accounts for 75% of the
market today.

4. India's Automotive sector snapshot | Nov. 2010 | 4InAlliance Consulting | www.inalliance.eu
Market shares distribution (cars only)
The 4 largest players (Maruti, Hyundai,
Tata, Mahindra) hold 83% of market
shares.
The next 4 (GM, Honda, Toyota, Ford)
hold 12%
95% of the market is in the hands of 8
manufacturers (none of which are
European...)
Maruti Suzuki
45%
Hyundai
16%
Tata
14%
Mahindra
8%
GM
4%
Honda
3%
Toyota
3%
Ford
2%
Fiat
1%
Skoda
1%
Others
2%
Market shares distribution
Source : SIAM, 12/2009

5. India's Automotive sector snapshot | Nov. 2010 | 5InAlliance Consulting | www.inalliance.eu
European cars : manufacturing and marketing set-up
= European brands dealers
= population density > 250
= European brands dealers
= wealthiest areas
35
BMW 17 CKD / SKD (Chennai)
14
62
38
FIAT 110
Some European manufacturers set-up
Dealerships Manufacturing
Mercedes CKD / SKD (Pune)
Audi CKD / SKD (Pune)
Skoda CKD / SKD (Pune)
Volkswagen CKD / SKD (Pune)
CKD / SKD (Pune)
Import duty on complete cars
(« CBU ») = 100%
Import duty on SKD and CKD
parts = 10%
Except for luxury
vehicles (low volumes,
less rivalry), the route to
the Indian market for
foreign manufacturers is
either the KD model or
complete localisation.

6. India's Automotive sector snapshot | Nov. 2010 | 6InAlliance Consulting | www.inalliance.eu
Main automotive industry clusters
Mumbai - Pune – Nasik –
Aurangabad - Gujarat
(non exhaustive)
Chennai – Bangalore -
Hyderabad
(non exhaustive)
NCR – Punjab – Rajasthan -
Madhya Pradesh
(non exhaustive)

7. India's Automotive sector snapshot | Nov. 2010 | 7InAlliance Consulting | www.inalliance.eu
Some decisions facing foreign Tier 1 and 2 entrants
Which location ?
Northern cluster ?
(Suzuki, Honda...)
Western cluster ?
(EU manufacturers)
Southern cluster ?
(Ford, Hyundai...)
Alone ?
With a local partner ?Local assembly ?
Transaction =
sale of components
+ +
Direct export ?
Transaction =
sale of products
+ +
Local manufacturing ?
Transaction = Sale /
licensing of know-how
+ +
+ -
● Could create a
competitor
● Partner choice
conditions success
● ….
● Faster ramp-up
● Lower investment
● Access to partner's
network
● ….
+ -
● Slower ramp-up
● HR and finance
hungry
● ….
● Total control
● No revenue sharing
● Gain precise
market knowledge
● ….

8. India's Automotive sector snapshot | Nov. 2010 | 8InAlliance Consulting | www.inalliance.eu
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