Indian Automobile

INDIA POST INDEPENDENCE GROWTH OF AUTOMOTIVE INDUSTRY
A view point by: Rakesh Saini rcsaini.blogspot.com
rcsaini.blogspot.com
INDIA POST INDEPENDENCE GROWTH OF AUTOMOTIVE INDUSTRY
Presented By:-
Manish Sharma Rakesh Saini Sandeep Yadav Saurabh Chaudhry rcsaini.blogspot.com
CONTENTS
THE INDIA STORY INDIAN SUCCESS STORIES INTERNATIONAL SUCCESS STORIES
INDIA ADVANTAGE
BUSINESS OPPORTUNITIES BUSINESS OPPORTUNITES FOR PHILIPPINES SME : ADDING VALUE WINNING ATTITUDE ACKNOWLEDGEMENT
rcsaini.blogspot.com 3
START OF AUTOMOBILE INDUSTRY: TWO CONTRASTING ERAS
Pre Independence & Post independence
GLIMPSE OF PRE INDEPENDENCE ERA WHERE IT ALL STARTED

In
1935 ,Sir M Visveswaraiya had taken up the task of lobbying the development of automobile industry with Development of Tatas steel works at Jamshedpur and Bombays metallurgical workshops. On 17 April, 1936 at the Indian Merchants Chamber in Bombay,policies were formulated. In 1942, the Birla group formed the Hindustan Motors Limited in Calcutta with a paid-up capital of Rs 4.96 crore. Walchand in 1944 formed the Premier Automobiles Limited In Bombay with a paid-up capital of Rs 2.2 crore. The Premier Automobiles set up their own ancillary industries pistons (India Piston started production in 1952), cylinder liners (started by India Pistons in 1952),leaf springs (started by Metropolitan Springs in 1951), electric bulbs (started by Pradip Lamp Worksin 1951), fuel pump diaphragms (undertaken by United Trading Company in 1944 for the Defence Department)
GLIMPSE OF PRE INDEPENDENCE ERA WHERE IT ALL STARTED (CONT)
The private business houses solely shouldered the responsibility of manufacturing The rationale behind the initiation of government investment in Indian industry is still not clear. Govt at that time invested but without any proper plans for equitable growth. It passed acts and laws that aimed at regulating and curbing the industries rather than supporting private players giving tem incentives in developing industries.
CURRENT SCENARIO
Fastest growing passenger car market Worlds second largest two wheeler market Largest two wheeler manufacturer and fifth largest commercial vehicle manufacturer Automobile industry with turnover of US $20 Billion Auto component industry with turnover of US $10 Billion Tyre industry with turnover of US $3 Billion In addition, India is increasingly positioning itself as export hub Exports of Indian manufacturer automotive parts will increase from around $1 B today to $2,5 B by 2010
CURRENT SCENARIO
The Indian market volume for cars will double in size until 2010, and by 2015, the Indian market will be at par with the German car market joining the club of the five largest Auto markets in the world With five cars per thousand inhabitants the market is far from saturation (compared to 10 cars per thousand in China and 400-500 per thousand cars in Germany, Japan, and the US)
PHASES OF AUTOMOBILE INDUSTRY
WHY INDIA?
a. b. c.
LOW PRODUCTION COST

75% of cars produced in india cost less than us $10000. Labour cost 8-9% of sales as compared to 30-35 % in developed countries. Young workforce helping in from high medical cost and absenteeism.
a. b.
CHEAP R&D
over 250 indian expatriates returned in R& D work in domestic automobile companies. Rs. 100000 crore to be invested in industry with European and us car majors also coming
a. b.
BIG MARKET
overtook korea to become 3rd largest auto market in asia pascific slated to be world largest behind china and us in 2030 & by 2050 world largest car base
a. b. c. d.
SMALL CAR HUB

current investment is around rs. 70000 crore to make India auto hub. 65% of this amount is for small segment 3rd largest producer of small car only behind japan and brazil. 71% of domestic market is shared by small car
WHY INDIA?
INCREASING PATENTS
a. Patents filed by top 6 local manufactures has jumped to 85% in last 18 months over period of june 95 to dec 2004. b. Tata motors with ratio of 60% patents filed to issued standing & Bajaj auto has 22%.
ECOURAGING LAWS
a. Middle class is buying capacity has forced govt to formulate policy. b. Foreign investment 100% gives edge over china where local partners are mandatory. c. By 2016 altleast $35 billion foreign investment is estimated. d. Plans to lower taxes, especially for companies exporting and manufacturing small cars.
AFFORDABLE TESTING
a. With NATRIP (NATIONAL AUTOMOTIVE TESTING AND R&D INFRASTRUCTURE PROJECT ) cost advantage of 25-30% can be achieved. b. With BMW, TOYTA, HONDA, NISSAN using testing for durability and rcsaini.blogspot.com performance of their car
FACTORS THAT DEFINES GROWTH OF INDUSTRY
Macroeconomic factors Vehicle Penetration driven by improvements in infrastructure, roads & highways Government Policy
12
MACROECONOMIC FACTORS
GDP Growth Demographics Income growth Shift in income distribution
Credit penetration
13
MACROECONOMIC FACTORS
14
MACRO ECONOMIC INDICATORS (2004 - 05)

Land Area: Population: GDP: Real GDP Growth: Gross Domestic Savings: Gross Domestic Investment: Per Capita Income: Inflation Rate: 3.29 m sq. km. 1.09 b US $ 630 b 6.9 % 28.1 % (2003 - 04) 26.3% (2003 - 04) US $ 580 6.4 %
15
VEHICLE PENETRATION DRIVEN BY IMPROVEMENTS IN INFRASTRUCTURE, ROADS & HIGHWAYS
Source:Economic survey, 2004 - 05

GOVERNMENT POLICY
Taxes Excise Foreign direct investment
17
FDI INFLOWS TO INDIA
7000 6000 5000 4000 3000 2000 1000 0 2000-01 4029
6125 5526 5036 4674
2001-02
2002-03
2003-04
2004-05
FDI Inflows ($ million)

RISK OF POTENTIAL BUBBLE !
IS GROWTH OF INDIAN AUTOMOTIVE INDUSTRY A POTENTIAL BUBBLE WHICH IS GOING TO BURST OR IT IS A SUSTAINED & STABLE GROWTH ??????
Every growth is an outcome of the several factors working in synchronization & accuracy of market forecast Indian Automotive industry is growing at a real fast pace The same was the case with Brazilian automotive industry in early 1990s , but the bubble of its growth burst due to high interest rates, a general recessing in 1998 and a large devaluation in 1999. It has yet to fully recover to old-1990s level. In the 1990s, the Brazilian auto market went through a roller coaster ride the early upswing attracted a number of players and investment dollars Sooo Is India next Brazil or potential China ? ? ?
COMPARING INDIA TO BRAZIL
AUTO SALES
- As compared to Brazil, the sales in Indian Automotive industry is increasing at a steady level.
-From 2000 till now the sales are showing an upward trend continuously.
THE RISE & FALL OF THE BRAZILIAN AUTO INDUSTRY !!
1980-1989 (Stagnation) : Low investment, less favorable policies & incentives, poor quality cars & no integration into OEMs 1990-1992 (Liberalization) : Strong increase in demand, up gradation of local facilities increased & high quality imports. 1993-1998 (Overheating) : High level of FDI & local investment due to Govt. incentives & policies, optimistic growth improvement & forecast. 1998-2002 (Capacity glut) : General Recession leading to decline in sales & high overcapacity resulting in large losses for OEMs. rcsaini.blogspot.com
INVESTMENT IN BRAZIL & THE RESULTS
-Seeing the trend in early 90s, foreign players invested hugely in Brazil. But this is what they got! -It proved fruitful for the early entrants like Fiat but later on the sales were much less then there installed capacity. -It proved to be total loss full affair for the late entrants like the Renault rcsaini.blogspot.com
BUTBUTBUT..!
Progress in the Indian automotive sector has been far more deliberatelowering the risk of a potential bubble
INDIA NEXT BRAZIL OR POTENTIAL CHINA ?
The prospects for the Indian automotive industry are far brighter Growing consumer base makes the Indian market more akin to the Chinese than the Brazilian market. Market linked exchange rate & availability of trained manpower at a competitive cost have further added to the attraction of Indian Auto market.
ENTRY INTO THE INDIAN MARKET
IMMEDIATE ACTION IS REQUIRED

- It may be late for the new entrants but Its better late then never. New entrants can get huge benefits even now with proper Planning & Forecasting the Segment & Area to target as Indian market is far from saturation.
PATH TO ENTRY INTO THE INDIAN MARKET
MAJOR PLAYERS IN THE INDIAN CAR MARKET

Today, Indian and Foreign JV account for 77% passenger car sales. Tata is the only sizable player with not international partner yet.
FUTURE VISION
AUTOMOTIVE MISSION PLAN (AMP) 2006-2016

Indian Ministry has undertaken to lay down the road map for future development of the industry in the form of Automotive Mission Plan 2006-2016 . It Aims at doubling the contribution of Automotive sector in GDP by taking the turnover to 145 USD in 2016 with special emphasis on export of small cars, MUVs, 2 & 3 wheelers and auto component & employment to 25 million people till 2016. It also considers the fact that India has the highest proportion of population below 35 years (70% Potential buyers), which means that 130 million people will get added to the working population between 2003-2009. The trend indicate that small & medium cars would remain dominant & a shift towards high end cars is expected at a faster rate.
ELEMENTS OF THE POLICY

INVESTMENT Appropriate Tariff Policies Investment Support INFRASTRUCTURE Road, Rail, Port & Power Testing, Certification & Homologation Automotive Retail Trade & Service EXPANSION OF DOMESTIC DEMAND * ENCOURAGING EXPORTS SUPPORT TO DEVELOP R & D LONG TERM EMISSION ROADMAP HARMONIZATION OF SAFETY STANDARDS & ROAD SAFETY INCENTIVISING MODERNISATION OF VEHICLE FLEET
ELEMENTS OF THE POLICY Contd.

INSPECTION & CERTIFICATION SYSTEM ENSURING AVAILABILITY OF HUMAN RESOURCE MONITORING COMITTEE
QUERIES & FEEDBACK ??????????
THANK YOU

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INDIA POST INDEPENDENCE GROWTH OF AUTOMOTIVE INDUSTRY

A view point by: Rakesh Saini rcsaini.blogspot.com

INDIA POST INDEPENDENCE GROWTH OF AUTOMOTIVE INDUSTRY

Manish Sharma Rakesh Saini Sandeep Yadav Saurabh Chaudhry rcsaini.blogspot.com

THE INDIA STORY INDIAN SUCCESS STORIES INTERNATIONAL SUCCESS STORIES

START OF AUTOMOBILE INDUSTRY: TWO CONTRASTING ERAS

Pre Independence & Post independence

GLIMPSE OF PRE INDEPENDENCE ERA WHERE IT ALL STARTED

GLIMPSE OF PRE INDEPENDENCE ERA WHERE IT ALL STARTED (CONT)

PHASES OF AUTOMOBILE INDUSTRY

LOW PRODUCTION COST

SMALL CAR HUB

FACTORS THAT DEFINES GROWTH OF INDUSTRY

GDP Growth Demographics Income growth Shift in income distribution

MACRO ECONOMIC INDICATORS (2004 - 05)

VEHICLE PENETRATION DRIVEN BY IMPROVEMENTS IN INFRASTRUCTURE, ROADS & HIGHWAYS

Source:Economic survey, 2004 - 05

Taxes Excise Foreign direct investment

FDI INFLOWS TO INDIA

7000 6000 5000 4000 3000 2000 1000 0 2000-01 4029

6125 5526 5036 4674

FDI Inflows ($ million)

RISK OF POTENTIAL BUBBLE !

COMPARING INDIA TO BRAZIL

THE RISE & FALL OF THE BRAZILIAN AUTO INDUSTRY !!

INVESTMENT IN BRAZIL & THE RESULTS

INDIA NEXT BRAZIL OR POTENTIAL CHINA ?

ENTRY INTO THE INDIAN MARKET

IMMEDIATE ACTION IS REQUIRED

PATH TO ENTRY INTO THE INDIAN MARKET

MAJOR PLAYERS IN THE INDIAN CAR MARKET

AUTOMOTIVE MISSION PLAN (AMP) 2006-2016

ELEMENTS OF THE POLICY

ELEMENTS OF THE POLICY Contd.

QUERIES & FEEDBACK ??????????

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