A Presentation on Landscape of

Automobile Industry sector

Consulting Club

Evolution of Automobile Industry

Initial Years
Manufacturing was licensed

Early to mid 90s

High Customs duty on import

Sellers market and long

waiting periods

Steep excise duties &

sales tax

De-licensing in 1993

2 Major players:
Premier Automobiles Ltd
& Hindustan Motors

1980s
Entry of MUL, better product,
with government support
Sellers Market
Long Waiting Periods

Removal of capacity
restrictions
Decrease in customs &
excise
Auto finance boom- more
players (foreign banks & non
banking companies, better
schemes.

Mid 90s Early 2000s

Buyers market
Increase in Indigenization
Easy Auto finance
Manufactures diversifying
into related activities:
finance lease, fleet
management, insurance
and used car market

Indian Automotive Industry

AUTOMOBILE

2 WHEELER

3 WHEELER

I.C.V.

MOTORCYCLE

SCOOTERS

PASSENGER
VEHICLE

COMMERCIAL
VEHICLE

M.C.V.

H.C.V.

SCOOTERETTES

MOPEDS

Trends in the automobile sector

CAGR 15.4%

Domestic Sales have been growing strongly

Exports have nearly tripled in the last 5 years
Largest three wheeler market in the world
4th largest passenger vehicle in Asia
4th largest tractor in the market
5th largest commercial vehicle market in the
world

CAGR 14.2%

CAGR 39%

Segment wise market share

Three
Wheeler

CVs

Passenger
vehicles

Two Wheeler

The industry has not experienced much change in its structure over the last 6
years
Two- wheelers form the major share of domestic sales
Passenger vehicles lead the exports market(57.4%)
2 wheelers form the bulk of exports as well, but are losing share to Passenger
vehicles
The growth in the two wheeler market is driven by the motorcycle market and is
expected to grow at 14-15 % year on year

The Key Players

Passenger vehicle
Two wheeler
Commercial
vehicles

TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force

motors, Eicher Motors

Passenger
vehicle

TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra &
Mahindra, Daimler Chrysler, Hindustan Motors

Two Wheeler

Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors

Three Wheeler

Bajaj Auto, Piaggio India

Opportunity India - Fast pace Growth

Largest democracy
4th largest economy by PPP index
6th largest energy consumer
ForEx reserves skyrocket from USD 42 bn (2001) to
US$ 133 bn ((February, 2009)
GDP growth to continue between 6-8%
3rd largest economy by 2050: Goldman Sachs
Leading in IT & BPO
Oil & Gas and Biotechnology sunrise industries

Two Wheeler Market

Present estimated size

CAGR (last 5 years)

5.4 mn units per year

10%

Average two-wheelers per 1000 people

India
China

27
08

Auto Component Market

Estimated market size

US$ 6.7 bn

Estimated market size (2020) US$ 47 bn

Projected CAGR

25%

Auto Component Industry Structure

50 ~ 500
Mill US
$

5 ~ 50 Mill US $

1 ~ 5 Mill US $

16 Cos

149 Cos

237 Cos

India; A Home to global players

Product
Cars/SUVs

Players
Suzuki, Honda, Toyota,
Mitsubishi, GM, Ford, DaimlerChrysler, Skoda, Fiat, Hyundai,
Tata, M&M
Two-wheelers TVS, Hero Honda, Bajaj, Yamaha,
Kinetic, LML
CVs
Tata, Ashok Leyland, Tatra, EicherMitsubishi, Swaraj-Mazda, M&M,
Volvo
Tractors
Escorts, M&M, L&T, Punjab
Tractors, New Holland, ITLRenault, John-Deere, Steyr

Manufacturing Hub for Vehicles

Hyundai - Export Base for Small Cars
Skoda - Hub for exports of Cars to neighbouring
countries
Ford exporting of Ikon to South Africa &
other countries
Mitsubishi & Yamaha - Hub for 125 cc Motorcycles
Maruti Suzuki- Exports cars to European Union
Hindustan Motors - Hub for Two Wheelers Exports

India - Manufacturing Hub for Components

Toyota Motors Global Hub for Transmissions

Daimler Chrysler sourcing > 70 million Euro

Ford full fledged component sourcing team

Fiat sourcing components

Export from India

Auto Components expand markets abroad

Australia
2%

Africa
11%

Others
4%

America
28%

Asia
27%
Europe
28%

Buy from India

Major Tier 1 suppliers buying auto-components
from India for their global requirements

General Motors, USA - Global Purchasing Team (Halol)

Volvo, Sweden - Global Buying Team (Bangalore )

International Truck & Engine Co - Global Purchasing

Cummins, USA - Global Purchase Team (Pune)

Caterpillar, USA - Global purchase staff (Delhi)

Delphi, USA - International Purchase Office

Motorola Automotive Electronics Division, USA

Visteon exporting India-made components worldwide

Partners with India

Tier 1 Companies leverage local

manufacturers for Contract
Manufacturing

Mitsubishi and Ford tie-up with

Hindustan Motors
Kawasaki ties-up with Bajaj
Hero ties with Honda

Future prospects
India Advantage-2020

The Market Advantage

Fast paced urbanisation
to rise from 28% to 40% by 2020
Upward migration of
household income levels
Middle class expanding by
30 - 40 million every year

Growing working population

The Quality & Productivity Advantage

Auto Companies achieving high
productivity through best practices:
TQM
TPM
Six Sigma
Toyota Production Systems / Lean
Companies growing in ranks can offer
Highest Parts Per Million levels of quality

The Policy Advantage

Auto Policy 2002 promotes an
integrated automotive sector
2001- Quantitative Restrictions were
removed
Incentives for R & D
Stringent environmental controls

KEY ENABLERS

Favorable Demographics
Improving income curve & low rates
1 Global Motorcycle Manufacturer
Largest Two-Wheeler Manufacturer
2nd Largest Tractor Manufacturer
5th Largest Commercial Vehicle
Manufacturer

KEY CHALLENGES

Cost Pressure
High Expectations
Inadequate Infrastructure Development

Key Focus Areas

Product development( includes collaboration, new products developed)
Vendor base (quality of vendors, skill levels , size etc.)
Manufacturing capability( quality levels, productivity & skill levels, technology )
Service levels
Supply chain
Labor law
Leverage IT
Key Features of Future Auto Policy
Foreign Direct Investment
Import tariff
Incentives for Research and Development (R&D)
Environmental Aspects
Other measures

Thank You