INDIAN AUTO COMPONENT INDUSTRY

AN OVERVIEW

1
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

2
 Introduction

Automotive Component Manufacturers Association of

India

Role An apex agency of the Indian Automotive Industry

588+ companies forming majority of the

auto component output in the organized sector
Members
ACMA operates on Quality System based
on ISO 9001:2000. Getting upgraded to
Quality System ISO 9001 : 2008 version by end June 2010

As Automotive Component Manufacturers

Association of India in the year 1982
Re-Christened

Inception

In the year 1959 as The All India Automobile & Ancillary Industries
Association (AIA & AIA)
 ACMA and Its Services

Promotes Indian
Automotive Component Industry

Collection &
Technology Quality
Trade Promotion Dissemination of
Up-gradation Enhancement
Information

Vital Catalyst for Industrial

Development

4
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

5
 The Indian economy poised for Growth...
Real GDP growth rate: India vs. World
9.2 9.8 9.3
10 India
7.9
World 8.2
8
5.6 7.2
5.2 6.7
6 4.0
3.6 5.1
Growth (%)

5.7 5.9 5.8

4 5.4
4.3
2.9 2.7
2

0
1950's 1960's 1970's 1980's 1990's 2001-03 2004 2005 2006 2007 2008 2009 2010
-2 -2.2 Estimated

-4

Slow growing closed economy Fast growing open economy

Transformation
Composition of GDP
Agriculture
21% Average Real GDP growth in last 5 year was 8.5%.
Services
52%
GDP Per Capita is US $ 1018

Manufacturing Projected GDP growth in 2010-11 is 8.2%

27%
6
Source: IMF Apr’09, Economic Survey 2008-09 & RBI Bulletin
 Growing trade, Investments & Forex reserves…
350
Imports(US $ bln)
300 Exports(US $ Bln) 291
274
281 279
FDI(US $ bln)#
250 FE Reserves* ( US $ bln) 253 252

200 181.3 182.6

177
149.2
150 136 173.1
163
107 142
111.5 124.6
100 75.4
78.2 103.1
83.5
50 61.4 63.8
52.7 24.57 27.3
15.7 33
4.2 3.1 5.5
2.6
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

# Partly Estimated * As on May 19, 2010

7
 Indian Economy

Exchange Rate is Market Driven & Continued Import Tariff Reduction

49.0
44.9 45.5 44.4
44.3 47.0
39.5

15
12.5 10 8.5
7.5* 7.5* 7.5*

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

* Peak rate 10% Exchange Rate Import Tariff

* As on April 20, 2010

8
Source: Economic Survey 2007-08
 Demand Drivers and their Impact…

Short Term Long Term

Infrastructure development
(US $750 billion investment
between 2007 – 2015*)
Low penetration rate of Cars
(8/1000)
Easy access to capital although Low cost of Skilled Manpower
interest rate is high
*Source :CII( IECIAL)
According to McKinsey, the
middle class will grow from
50 million to 550 million by
2025
Continuously Improving
Quality resulting in Export of
Automobiles and Auto
components
& Rapidly growing Design
Capability
9
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

10
 Auto Investments & Their Spread

NORTH

WEST EAST

SOUTH

Large
Largenumber
numberof
ofIndian
Indian&&Global
GlobalOEMs
OEMsacross
acrossthe
theCountry
Country 11
 Passenger Vehicle Production
(Qty in ’000 Nos.)

PROJECTED CAGR 2009- 3.0m

3,500 2014
Cars - 6.3% 277
MUV’s - 0.4%
3,000
2002-2009 CAGR Overall- 6.3%
2654
Cars - 19.2%
2351
2,500 MUV’s - 13%
Overall - 18.4%

1838
2,000 1778 2078
1545
1309 1620
1,500 1210 1532
988 1323

1028 1113
1,000 722

842
608
500 222 246 218 273
146 182 196
114

0 2014-15

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Cars MUVs Total Pass Veh

12
Source: SIAM & ACMA-McKinsey Report
 Market Share- Passenger Cars

2009-10(Apl-Mar)

Honda Ford SkodaAuto

3.1% 1.8% Fiat 0.9% Others
GM 1.3% 1.9%
3.6%

Tata
10.5%
Maruti
46.3%

Hyundai
30.5%

13
 Commercial Vehicles Production
(Qty in ’000 units)
2002-2009 CAGR
M & HCVs = 11%
LCV’s = 21.5%
600
Overall = 15.9%
M&HCVs 520 549 566
500 LCVs

CVs
417
400 391

350 294 316

300 295
275 250
211 219 225
254
200 202 166 226
192
172
121
100
139
109
81
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

14
 Tractors Production
(in Nos)
CARG 11.1%
500
433
450
400
353 346
350
296
300 340

250
167 249
200
150 192

100
50
-
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

15
 2-Wheeler Production
(Qty in million Nos.)
??

20. 0

CAGR
2002-2009
11%
15. 0

10.5

10. 0 8.4 8.0 8.4

7.6
6.5
5.1 5.6
5. 0

-
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2014-15
16
 The Future of Auto in India: 2016

Already achieved and now

revise target has to be set
(million units)
Segments Domestic Exports Total Global Current
Position Global
Sales Position
Passenger 3.00 1.10 4.10
Vehicles
7 7
Commercial 0.70 0.08 0.78 4 8
Vehicles
Three Wheelers 0.97 0.50 1.47 1 1
Two Wheelers 32.0 3.00 35.00 2 2
Tractors .65 .05 .70 1 2
Source : SIAM 17
 “INDIA” – A Global hub for Compact Cars

Maruti Suzuki : General Motors :

Capacity 250,000
Investment US$ 380 million.
Hyundai :
Capacity Increased to 600,000
Investment US$ 1 billion
Capacity 140,000
Investment US$ 650 million.
Nissan-Renault :
Capacity 400,000
Investment US$ 1 Billion

Tata Motors :
Capacity 500,000
Investment US$ 240 million.
Toyota :
Capacity 200,000
Investment US$ 310 million.
Ford :
Capacity 200,000
Investment US$ 500 million.
VW :
Capacity 110,000
Investment US$ 750 million.
Honda :
Capacity 60,000
Investment US$ 250 million.

Increased
Increasedlocal
localcontent
content--Creating
CreatingGlobal
GlobalCompetence
Competence 18
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

19
 Indian Auto Component Industry Focus: Global
Best Practices
Significant number of companies
with Quality certifications &
recognition: Industry fast embracing modern
shop-floor practices:
• ISO 9000 : 562
• 5-S; 7-W
• TS 16949 : 397
• Kaizen
• QS 9000 : 56
• TQM
• ISO 14001 : 186
• TPM
• OHSAS 18001: 60
• 6 Sigma
• Deming Award : 11
• Lean Manufacturing
• TPM Award : 15
• Japan Quality Medal : 1
• Shingo Silver Medallion : 1
ACMA membership

20
 Auto Component Industry – Exports & Imports
(US$ billion)
CAGR:
Exports 18%
Imports 27%
8
Exports
6.8
7 Imports
5.9
6 5.2
S. America
Australia 1.3%
5 3.7%

3.8
4 3.6 3.5 Asia 23.8%
3.2 Europe 40.4%

3 2.5
1.9
1.4 2.7
2 2.5
1.7 Africa 8.0%
1 N. America
1.2 22.6%

0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Profile of Exports:
•OEM/Trier-1: 80%
•Aftermarket: 20%
21
 Auto Component Industry: Size & Product Range

US$ Billion
CAGR : 19.2%

25
E lec tric al  Others
E ng ine P arts
P arts 7%
19.2 31%
20 18.0 18.4 9%

15.0
E quipments
15 10%
12.0

10 8.7 S us pens ion 

6.7 & B raking  
P arts
12% D rive 
5
T rans mis s io
B ody & 
n & S teering  
C has s is
0 P arts
12%
19%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

22
Source : MOHI Automotive Mission Plan (AMP)
 Auto Component Industry Investments
(In US $ Billion)
CAGR: 15 %

8.0 7.4
7.2 7.3

6.0 5.4

4.4
4.0 3.8
3.1

2.0

0.0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

23
 Increased Component Outsourcing
from India

Indian
IndianComponents
Componentsalready
alreadyDriving
Drivingon
onyour
yourRoads…
Roads… 24
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan : ACMA Vision

Capabilities & Challenges of Component Suppliers

The Way Forward

25
 Automotive Mission Plan 2016

Government of India
SIAM
ACMA

Automotive Plan
2016

On 29.01.07, the Prime Minister released

Automobile Plan 2006 -2016 to give a road map to
Indian Automobile Industry

Increase turnover to
Increase export revenue Provide employment to
$145 billion by 2016
To $ 35 billion by 2016 from additional 25 million people
from $ 35 billion
$ 4.1 billion at present by 2016
at present

By 2016, the Automotive sector is expected to contribute

10% of the country’s GDP and 30~35% of the Industry

26
 ACMA Vision for 2016
20 : 20 : 1

Growth of the Automotive Component Industry directly

linked with the growth of Automobile Industry.
Over 70% sales to the OEM

20
20 Achieve $20 billion in Domestic Sales

20:20:1
20:20:1 20
20 Achieve $20 billion in Exports Sales

11 Create 1 million additional Jobs

27
 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

28
 Capability of Indian Component Suppliers

1. Conversant in all Global Automotive Standards

2. Investments in R&D to meet OE Customer requirements
3. Maintain quality in large volume production
4. Flexibility in small-batch production.
5. Build to Print (B to P) and Art to Print (A to P)
6. Respect for Intellectual Property
7. Growing IT Capability for Design, Development & Simulation.

29
 Indian Component Industry Development Capability

During the development process, Tata

Motors asked suppliers to think out of the “Hyundai i20, Made in India with
box and innovate products and process European Design feel”
design. Hyundai exported 286K cars last year
with a focus on Europe
This approach has resulted in 37 patents
being filed to cover innovations in the car
and has given Indian Engineers a canvas to
showcase their skills and capabilities.

Indigenization levels for high volume cars are at 80-90%

30
Some Design & Research
Centres in India

31
 Challenges India is Committed to Address

1. Infrastructure Deficit

2. Talent Crunch

3. Scaling-Up the industry

4. Access to World-class Technology and Quality

Practices

5. Remaining cost competitive

 Contents

About ACMA

The Indian Economy

The Automotive Industry

Auto Component Industry of India

Automotive Mission Plan

Capabilities & Challenges of Component Suppliers

The Way Forward

33
 Areas of Cooperation

• Manufacturing

• Technology

• Research & Development

• Quality

• Environment

34
 Areas of Cooperation

1. Global SMEs can invest in green-field manufacturing in India to meet

growing domestic demand for auto-components.

2. Opportunities for Partnerships with Indian SMEs at Tier 2/3 level –

the Next Wave - covering the entire automotive supply chain to
address not only product technology, but also “Process Technology”.

3. Opportunity for supply base discovery.

4. Opportunity for Strategic Alliance to cover Global customers

5. Joint R&D with Indian companies for new product development and
designing is also an attractive proposition.

35
 The Addressable Opportunity…

• Establish Partners/JV in India for

- Safety Components
- Auto Electronics, Electromechanical Sub assemblies
- Embedded Systems
- Informatics & Telematics
- New Material
- Simulation Technology
• Collaboration for Manufacturing Excellence and Process Design
• Production Sharing in India & abroad for a Holistic Service
Capability
• Partnering for Global Requirements
• Merger & Acquisition 36
 ACMA Office
The Capital Court, 6th Floor, Olof Palme Marg, Munirka,
New Delhi – 110 067
Tel: 011-26160315, 26175873, 74
Fax: 011-26160317
E-mail: acma@acma.in,
Website: www.acmainfo.com

37