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Transcript of Auto component
Indian auto-component industry
Presenting by:Sangam Lalsivaraju-138Dheeraj singh-169Swati mathur-146Manu pawar-147Parmod singh-133Surin gandhi-189
Introduction • The auto component companies in India are contributing to the growth of
this sector by providing genuine , cheap and reasonably priced automotive parts.
• The industry growth was particularly visible in the exports of auto components.
• The CAGR of the auto component exports in the five years clocked 27.5% during 1998-2003.
• According to Forst & Sullivan, Indian auto component exports were to touch US$1.11 billion in 2004-a 38.8% surge from the previous year as against $578 million in 2002.
• The Indian auto component sector has been growing at 20 per cent ayear since 2000 and is projected to maintain the high-growth phaseof 15-20 per cent till 2015
The Growth Journey
MUL indigenization
• The onset of India's liberalization policy and the subsequent arrival of foreign auto majors came as a shot-in-the-arm for the Indian auto component industry.
• This forced MUL to indigenize its component suppliers rather than importing them , Maruti’s decision to localize its content was not only because of government’s policy but also due to the cost effectiveness of local content.
• New entrants found it difficult to compete with maruti’s pricing, as it had already achieved 90% indigenization and had written off its initial capital investment.
• The entry of foreign auto component markers, force the domestic manufacturers to improve the quality.
• The domestic auto component industry contributed 87% of the needs of the automobile sector, while the rest was imported.
Composition of productionSegment %
Electrical part 7
Equipments 8
Suspension & braking parts
11
Drive & transmission steering parts
23
Engine parts 23
others 36
78
11
23
23
36
%
Electrical part
Equipments
Suspension & braking parts
Drive & transmission steering parts
Engine parts
others
Class segregation
• Three divisions are:1.MNC’s that operate with wholly owned subsidiaries
or through units where they held the controlling stake. E.g.: Delphi & Visteon, Denso India & MICO.
2.Owned by Indian promoters/public with a minority stake of foreign collaborators.
3.Wholly owned by Indian promoters/public. Sundaram Brake Linings(SBL) & Sundaram
Fasteners Limited(SFL)
SWOTStrengths: Weaknesses1. Large domestic market 1.Low labour productivity2. Sustainable labour cost advantage 2.High interest costs and
highoverheads3. Competitive auto component vendor base make the production uncompetitive4. Government incentives for manufacturing 3.Various forms of taxes push up the cost
of plants production5. Strong engineering skills in design etc 4.Low investment in Research and
development 5.Infrastructure bottleneck
Opportunities: Threats:6. Commercial vehicles: SC ban on overloading 1.Rising input costs7. Heavy thrust on mining and construction activity 2.Rising interest rates8. Increase in the income level 3.Cut throat competition9. Cut in excise duties10. Rising rural demand
PESTPolitical: Economical:
1. Environmental regulationand protection 1. Economic growth
2. Taxation 2. Monetary policy
3. International trade regulation 3. Government spending on research
4. Consumer protection 4. Policy towards unemployment
5. Employment law 5.Taxation
6. Government organization /attitude 6.Exchange rates
7. Competition regulation 7.Inflation
8.Stage of business cycle
Social: Technological:
8. Income distribution 1. Government spending on research
9. Demographics 2.Government and industry focus on tech’ effort
10. Labour/social mobility 3. New discoveries and development
11. Life style changes 4. Speed of technology transfer
12. Attitudes to work and leisure 5. Changes in material sciences
13. Education 6. Impact of changes in Information technology
14. Fashions and fads 7.Internet
15. Health & welfare
16. Living conditions
Porter’s model
Threat of new entry: Competitive rivalry:
1. Time and cost of entry 1.Number of competitors
2. Specialist knowledge 2.Quality difference
3. Economics of scale 3.Customer loyalty
4. Barriers to entry 4.Cost of leaving market
5. Technology protection
Threat of substitute: Buyer’s power:
6. Substitute performance 1.Number of customers
7. Cost of change 2.Price sensitivity
3.size of each order
Supplier’s power:
1. Number of suppliers
2. Size of supplies
3. Uniqueness of service
*
India as an automotive
hub
Proven product developmental capabilities•
Stable economic policies
Large and growing domestic demand
Availability of manpower
Export potential
High quality standards
Competitive manufacturing costs
Proximity to markets
Strategies to compete1. One obvious way for the Indian manufacturers to compete in the global export
markets is to focus on their current areas of strength . As the industry continues to grow with new export orders from automakers some strategies that Indian manufacturers can adopt to gain success in these markets.
2. Manufacture and export of small cars, Multi Utility Vehicles (MUV), two &three wheelers, tractors, components should be further promoted in lieu of the current export trends.
3. Appropriate Tariff Policy should be followed to attract further investments in the Automobile Sector.
4. Measures should be taken to expand the domestic market. 5. Exports should be more encouraged. 6. Policy initiatives for competitiveness and development of technology should be taken.7. Infrastructure development around identified automotive clusters should be
undertaken.8. Emphasis should be on more product innovation and Value added services as the
current customer demands better products and services aggressively
THANK YOU