Auto Component Industry in India

Automotive Component Manufacturers Association of India 1

Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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India-At a Glance •

Largest Democracy in the world with a population of 1,166 mln.

• Age structure: 0-14 years: 31.1% 15-64 years: 63.6% 65-over: 5.3% Sex ratio : At birth: 1 : 1.06 male(s)/female Life expectancy:

University* States/U Ts

INDIA

Central 20

State 216

69.89 years male 67.46 years female

Deemed Univers ity* 101

Institutions of National Importance * 13

Research Institution s 140

Arts, Science & Commerc e Colleges

Engg., Tech., & Arch., Colleges#

11,698

1,562

Indian IT Companies played a vital role in the development of the Airbus A380 and Boeing 787 Dreamlines Total no. of telephone connection as on Feb 2009 was 413million (14million subscriber added every month last year) 3

India-At a Glance Taj Mahal it's one of the 7 wonders

Chandrayaan-1 a fantastic success: European scientist National Aeronautics and Space Administration (NASA) astronaut Edward Michael Fincke said on Friday (September 11, 2009) the Chandrayaan Mission of the Indian Space Research Organisation (ISRO) was a success, with 95 per cent of the mission being accomplished.

Hyundai i-10, Foreign Made vehicle, 1st Launched in India then rest of the world

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Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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After decades of low growth, the economy moved into a high-growth phase…. Real GDP growth rate: India vs. World

10

9.2

India World

9.8

9.3

7.9

8 Growth (%)

7.3 5.6

6 3.6

5.2

4.0

5.1

5.9

5.7

5.4

4

5.8 4.3

2.9 2 0 1950's

1960's

1970's

1980's

1990's

2004

2005

2006

2007

2008

Fast growing open economy

Slow growing closed economy

Composition of GDP

2001-03

Transformation Agriculture 21%

Services 52%

Average Real GDP growth in last 5 years was 8.5% Projected GDP growth in 2009-10 is 6.1% GDP Per Capita is US $ 680

Manufacturing 27%

Source: IMF Apr’09, Economic Survey 2008-09 & RBI Bulletin 6

The Indian Economy India’s Trade, FDI and Foreign Exchange Reserves 300

Exports(US $ Bln)

250

291

281

Imports(US $ bln)

253

252

FDI(US $ bln) FE Reserves ( US $ bln)

200

181.3 149.2

173.1

136

150

124.6

111.5 75.4

163

142

107 100

182.6

103.1

78.2 83.5

50

61.4

63.8 52.7

4.2

3.1

2.6

5.5

2004-05

2005-06

15.7

24.57

27.3

0

2002-03

2003-04

2006-07

2007-08

Source: Economic Survey 2008-09 & RBI Bulletin 7

2008-09

Indian Economy Exchange Rate is Market Driven

48.4

46.0 44.9 44.3 45.5

Continued Import Tariff Reduction

49.0 39.5 25 20 15 12.5

Exchange Rate 2002-03 2003-04 2004-05

2005-06

10 8.5 7.5

Import Tariff 2006-07 2007-08

2008-09

* As on March 31, 2009

Source: Economic Survey 2007-08

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The Surging – Urban India

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The Emerging – Rural India

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What does this mean for us? The Demand Drivers Short Term Long Term Infrastructure development ($500 billion in the next 5-6 years)

According to McKinsey, the middle class will grow from 50 million to 550 million by 2025

Low penetration rate of Cars Continuously Improving (7-8/1000) Quality resulting in Export of Automobiles and Auto components Easy access to capital although interest rate is high (There is a Credit Squeeze in Short Term)

Low cost of Skilled Manpower & Rapidly growing Design Capability 11

Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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Investments are well Balanced

CARS & MUVs

CVs

2/3 WHEELERS

TRACTORS

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Passenger Vehicle Production (Qty in ‘000 Nos.) PROJECTED CAGR 2008-2014 Cars = 8.6% MUV’s = 4% Overall=8.5%

3,500 3,000 2001-2008 CAGR Cars =16.3% MUV’s = 11% Overall=15.5%

2,500 2,000

3.0m 277

2654

1778

1838

1545

1,500

1210

1309 1532

988

1,000 500

669 564

105

722 842 608

114

1620

1323 1028

1113

146

182

196

222

2003-04

2004-05

2005-06

2006-07

246 218

0 2001-02

2002-03

Cars

MUVs

2007-08

2008-09 2014-15

Total Pass Veh

Source: SIAM & ACMA-McKinsey Report

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Market Share- Passenger Cars GM Honda Siel 3.0% 3.2%

Ford M.- Renault 1.7% 1.0%

SkodaAuto 0.9%

Others 1.9%

2008-09(Apl-Mar)

Tata Motors 10.7% Maruti 45.5% Hyundai 32.1%

GM Honda Siel 3.2% 4.2%

M.- Renault Others 1.6, 2% 2.9% Ford 2.4%

2007-08(Apl-Mar)

Tata Motors 12.7% Hyundai 25.5%

Maruti 47.4%

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Commercial Vehicles Production (Qty in ‘000 Nos.) 350

M&HCVs

2001-2008 CAGR M & HCVs =10.7% LCV’s = 19.6% Overall=14.8%

LCVs

300

350

250

211

202 159

100

95

295

549 254

417

226

224

172

166 150

219

294

193

275

200

391

520

139

121 109 81

64 50

0

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09 16

2-Wheeler Production (Qty in million Nos.)

??

24. 0 22. 0 20. 0

CAGR 2001-2008 10%

18. 0 16. 0

13 ?

14. 0 12. 0 10. 0 8. 0 6. 0

5.6 5.1 4.3

6.5

8.4 8.0 8.4 7.6

4. 0 2. 0 -

2009-10

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 17

2014-15

Expectation Ahead Future Numbers : 2016 (Numbers in millions)

Segments Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers

Domesti Exports Total c Sales 3.00 1.10 4.10

Current Global Position

Global Position

7

9

0.70

0.08

0.78

4

11

0.97

0.50

1.47

32.0

3.00 35.00

1 2

1 2

Source : SIAM

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“INDIA” – A Base for Compact Cars Maruti Suzuki : • New car plant • Capacity 250K Hyundai : • Increase capacity to 600K cars. Tata Motors : • New plant to manufacture Nano Car, • Selling price USD 2000 • investment US $ 240 million. • Capacity 500K Toyota : • New Capacity 200K cars by 2008 General Motors : • New plant capacity 140K. • SOP Q3 2008. Nissan-Renault : • 50:50 JV, • Capacity 400K • Investment USD 1 Billion

VW : • New plant Investment Euro 400 million SOP Q3 2009. Honda : •

New Capacity 60K Investment $ 250 SOP Q1 2009.

Ford : •

New Investment US$ 500 million

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Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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Auto Component Industry

ACMA’s membership comprises 584 companies.

The Industry is graduating to world-class

Annual Turnover in Million US $

211

< 1 ~ 5 Million US $

206

> 5 ~ 25 Million US $ > 25 ~ 50 Million US $

84 42

> 50 ~ 100 Million US $

41

> 100 Million US $

Number of Companies 564 TS 16949

397 56 186 60

OHSAS 18001

Deming Award

11

TPM Awards

15

Suppliers Embracing Modern Shop-Floor Practices: -

5-S, 7-W Kaizen TQM TPM 6-Sigma Lean Manufacturing 21

Auto Component Industry - Statistics (Value in US $ Billion)

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09 Estimated

8.700

12.0

15.0

18.0

19.1

29%

38%

25%

20%

6%

1.274

1.692

2.469

2.673

3.520

3.80

37% 1.428

34% 1.902

47% 2.482

16% 3.600

32% 5.220

8% 6.80

40%

33%

30%

31%

45%

30%

Investment

3.100

3.750

4.400

5.400

7.200

7.70 7%

Export as % of

18.9%

19.5%

20.5%

19.2%

19.6%

19.9%

Turnover

6.730 24.6%

Exports Imports

Turnover 22

Comprehensive Product Range

Electrical Parts 9%

Others 7%

Engine Parts 31%

Equipments 10%

Suspension & Braking Parts 12% Body & Chassis 12%

Drive Transmission & Steering Parts 19%

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Auto Component Turnover POTENTIAL CAGR 2008 – 2015 11%

In US$ Billion

40

25

19.1

2002 – 2008 CAGR 23.4%

20

18

20

15 15

12 8.7

10

6.7 5.4 5

0

2002

2003

2004

2005

2006

2007

Source : MOHI Automotive Mission Plan (AMP)

2008

2009 24

2016

Auto Component Industry – Exports (in US$ billion) CAGR 2003-2008 Exports : 26%

3.6

2.5

20-22

POTENTIAL EXPORT CAGR 2008-2015 27%

5.9

3.8

2.9

1.7 1.2 2003

2004

2005

2006

2007

2008

2009

Projected 25

2016

Direction of Exports CONTINENT-WISE EXPORT OF AUTO COMPONENT 2007-08 North America 22%

South America 4%

Oceania 1%

Africa 7%

Middle East 7%

Europe 44%

Asia 15%

COMPOSITION OF EXPORTS

OEM/TIER 1 35%

Aftermarket 65%

1990s

OEM/TIER 1 80%

Aftermarket 20%

2008 26

Increase in Sourcing Components from India

27

Auto Component Sourcing

28

Auto Component Sourcing

29

Auto Component Import by Major Countries Auto Component Import by Major Countries Year To Date: January - December % Value in US $ Billion Reporting Country 2006 2007 2008 Change United States 100.98 97.72 91.27 -6.60 EU(27 Members) China Japan South Korea India

47.24 25.99 17.75 10.92 3.60

54.93 28.05 17.53 10.32 5.34

61.13 32.35 19.81 11.48 7.43

11.29 15.32 13.00 11.28 39.00

Auto Component Import by European Union(27 Members) Year To Date: January - December Value in US $ Billion Partner Country 2006 World Japan United States China Turkey South Africa Switzerland Korea South India Taiwan

47.24 10.52 8.43 5.28 3.57 2.81 2.79 1.33 1.24 1.48

2007 54.93 11.65 8.37 6.65 4.84 3.50 3.13 2.27 1.69 1.72

2008

% Share 2008

61.13   100.00 12.45   20.36 8.88   14.52 8.39   13.72 5.53   9.04 3.80   6.21 3.33   5.44 2.62   4.28 2.22   3.62 1.95   3.19

% Change 2008/200 7 11.3 6.8 6.1 26.2 14.3 8.6 6.1 15.3 31.2 13.7

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Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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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 $145 billion by 2016 from $ 35 billion at present

Increase export revenue To $ 35 billion by 2016 from $ 4.1 billion at present

Provide employment to additional 25 million people by 2016

By 2016, the Automotive sector is expected to contribute 10% of the country’s GDP and 30~35% of the Industry 32

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

20:20:1 20:20:1

20 20

Achieve $20 billion in Domestic Sales

20 20

Achieve $20 billion in Exports Sales

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Create 1 million additional Jobs

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Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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Capability of Indian Manufacturers Tata Nano: The Low Cost Car of The World Capacity 500K • The Price Rs 100,000~($ 2000)

Hybrid Scorpio: First in SE Asia! • • •

•

It is Diesel Electric Parallel, Full Hybrid Vehicle Offers • Start – Stop • Electric Launch • Torque Augmentation • Regenerative Braking Seamless, enhanced driving experience 35

Capability of Indian Component Suppliers 1. Conversant in all Global Automotive Standards 2. Investments in R&D to meet OE Customer requirements 3. Flexibility in small-batch production. 4. Growing IT Capability for Design, Development & Simulation. 5. Respect for Intellectual Property

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Some Design & Research Centres in India

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Contents India-At a Glance The Indian Economy The Automotive Industry Auto Component Industry of India Automotive Mission Plan Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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The Way Forward 1.

Auto-Component Sector needs US $ 1.5 billion of new investments every year for next 8 years.

2.

Overseas auto-component manufacturers, especially SMEs should invest more in capacity enhancements and greenfield manufacturing in India – to meet growing domestic demand for auto-components.

3.

Investments in Auto-IT sector is a high potential area.

4.

To encourage new wave of partnerships at the Tier 2/3 level covering the entire automotive supply chain to address not only product technology, but also “Process Technology”.

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Areas of Cooperation

• Manufacturing • Technology • Research & Development • Quality • Environment

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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 & Germany for a Holistic Service Capability • Partnering for Global Requirements • Merger & Acquisition •

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Contents India-At a Glance The Indian Economy The Automotive Industry

Automotive Mission Plan Supply Industry of India & Global Experiences Growing Capabilities of the Indian Industry The Way Forward ACMA & Its Services

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Introduction Automotive Component Manufacturers Association of India Role

An apex agency of the Indian Automotive Industry

570+ companies forming majority of the auto component output in the organized sector

Members

Quality System

As Automotive Component Manufacturers Association of India in the year 1982

ACMA operates on Quality System based on ISO 9001:2000

Re-Christened

Inception In the year 1959 as The All India Automobile & Ancillary Industries Association (AIA & AIA) 43

ACMA and Its Services

Promotes Indian Automotive Component Industry

Trade Promotion

Technology Up-gradation

Quality Enhancement

Collection & Dissemination of Information

Vital Catalyst for Industrial Development

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International Business Development Promote Promote India India as a Brand as a Brand

Organize Organize Business Business Development Development Delegation Delegation Overseas Overseas

Undertake Undertake Export Export Promotional Promotional Projects Projects

Organize Organize Participation Participation in Overseas in Overseas Automobile Automobile Exhibitions Exhibitions & & Fairs Fairs

Global Global Interaction Interaction through through Counterpart Counterpart Association Association

Organize Organize Private Private Exhibitions Exhibitions & & Suppliers Conference Suppliers Conference

Providing Providing International International Sourcing Sourcing Forums Forums

Facilitate Facilitate potential potential Business Partnership Business Partnership of of JV / Strategic Alliance JV / Strategic Alliance

Working Working closely closely with IPOs with IPOs in in India India

Dissemination Dissemination of of Export Enquiries Export Enquiries

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AUTO EXPO 2010

5th – 11th January, 2010, India

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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: [email protected], Website: www.acmainfo.com

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