INDIAN AUTO COMPONENT INDUSTRY AN OVERVIEW - ACMA

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INDIAN AUTO COMPONENT INDUSTRY

AN OVERVIEW

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Contents

Indian EconomyIndian Economy

Automotive IndustryAutomotive Industry

Capabilities & Challenges of Component SuppliersCapabilities & Challenges of Component Suppliers

About ACMA About ACMA

Vision 2020Vision 2020

Auto Component Industry of IndiaAuto Component Industry of India

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The Way ForwardThe Way Forward77

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Introduction

Automotive Component Manufacturers Association of India

Role

Members

Quality System

Re-Christened

Inception

An apex agency of the Indian Automotive Industry

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

ACMA operates on Quality System basedon ISO 9001:2000

In the year 1959 as The All India Automobile & Ancillary IndustriesAssociation (AIA & AIA)

As Automotive Component Manufacturers Association of India in the year 1982

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Collection &Dissemination of

Information

QualityEnhancement

TechnologyUp-gradation

Promotes IndianAutomotive Component Industry

Vital Catalyst for Industrial Development

Trade Promotion

ACMA and Its Services

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Promote India as a Brand

Promote India as a Brand

Organize Business Development Delegation

Overseas

Organize Business Development Delegation

Overseas

Undertake ExportPromotional

Projects

Undertake ExportPromotional

Projects

Organize Participation in Overseas Automobile

Exhibitions & Fairs

Organize Participation in Overseas Automobile

Exhibitions & Fairs

Global Interaction through

Counterpart Association

Global Interaction through

Counterpart Association

Dissemination of Export Enquiries

Dissemination of Export Enquiries

Organize Private Exhibitions &

Suppliers Conference

Organize Private Exhibitions &

Suppliers Conference

Facilitate potentialBusiness Partnership of

JV / Strategic Alliance

Facilitate potentialBusiness Partnership of

JV / Strategic Alliance

Providing International

Sourcing Forums

Providing International

Sourcing Forums

Working closelywith IPOs in IndiaWorking closely

with IPOs in India

International Business Development

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The Indian economy poised for Growth...

2.9

5.1

6.77.2

8.2

-2.2

2.7

3.6 4.05.6 5.2

7.99.2 9.8 9.3

5.7 5.45.9 5.8

4.3

-4

-2

0

2

4

6

8

10

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

Gro

wth

(%)

IndiaWorld

Slow growing closed economy Fast growing open economy

Transformation

Real GDP growth rate: India vs. World

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

Manufacturing27%

Agriculture21%Services

52%

Composition of GDPAverage Real GDP growth in last 5 year was 8.5%

GDP Per Capita is US $ 1018

Projected GDP growth in 2010-11 is 8.2%

Estimated

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61.478.2

111.5

149.2

291 279

181.3

253

27%

43%

34%

15%

-4%

40%

22%

0

50

100

150

200

250

300

350

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

0%

10%

20%

30%

40%

50%

Imports(US $ bln) Growth rate(%)

Imports (In US $ bln)

52.763.8

83.5

103.1

182.6 177

124.6

163

21%

31%

-3%

12%

23%

31%

21%

0

20

40

60

80

100

120

140

160

180

200

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-5%

0%

5%

10%

15%

20%

25%

30%

35%

Exports(US $ Bln) Growth rate(%)

Exports (In US $ bln)

4.2 3.15.5

27.3

33

2.6

24.57

15.7

-16%

-26%

185%

56%

112%

11%21%

0

5

10

15

20

25

30

35

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

0%

50%

100%

150%

200%

FDI(US $ bln)# Growth rate(%)

FDI (In US $ bln)

75.4

107

142

252274

173.1

281

1369%

-10%

4%

62%

22%

42%

27%

0

50

100

150

200

250

300

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

FE Reserves* ( US $ bln) Growth rate(%)

FE Reserve (In US $ bln)

# Partly Estimated * As on May 19, 2010

Growing trade, Investments & Forex reserves…In

US

$ bn

In U

S $

bn

In U

S $

bn

In U

S $

bn

9Source: Economic Survey 2007-08

Exchange Rate is Market Driven & Continued Import Tariff Reduction

* As on April 20, 2010

Exchange Rate & Import Tariff

* Peak rate 10%

44.9 44.339.5

44.445.5 4749

3%-1%

24%

-4%

-13%

-6%

0

10

20

30

40

50

60

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)-20%

-10%

0%

10%

20%

30%

Exchange Rate Growth rate(%)

Exchange rate (Rs. Vs. USD)

15

12.5

8.57.5

7.57.5

10

0%

-15%

0%

-12%-17%

-20%

02468

10121416

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)-25%

-20%

-15%

-10%

-5%

0%

Import Tariff Growth rate(%)

Import Tariff

** *

Impo

rt T

arif

f (%

)

Exch

ange

rat

e (R

s.)

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Low cost of Skilled Manpower & Rapidly growing Design Capability

Easy access to capital although interest rate is high

Continuously Improving Quality resulting in Export of Automobiles and Auto components

Low penetration rate of Cars (8/1000)

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

Infrastructure development ($500 billion in the next 5-6 years)

Long TermShort Term

Demand Drivers and their Impact…

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New Hub :Uttaranchal

Auto Investments & Their Spread

Large number of Indian & Global OEMs across the countryLarge number of Indian & Global OEMs across the countryLarge number of Indian & Global OEMs across the country

NORTH

EAST

SOUTH

WEST

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Vehicle production in India

2,200

150 120200

10,230

420

40

5,100

670

360

710

100

0

500

1,000

1,500

2,000

2,500

3,000

Passenger vehicles

SCVs LCVs M&HCVs Two- & Three-wheelers

Tractors Construction equipments*

2009 2015 (E) 2020 (E)

470 –530

540 –600

30,000 –33,500

940 –1,050

170 –190

1,100–1,220

390

8,700 –9,700

22,100

*Includes backhoes, track excavators, wheeled loading shovels, vibratory rollers and lif tall

Source: SIAM – EY study

In ‘0

00 u

nit

s

14

Two & Three wheelers

76%

Const. Equip.0%

Tractors2%

Passenger Vehicle

18%

M&HCV1%

LCVs1%

SCVs2%


72%

SCVs3%

LCVs1%

M&HCV1%

Passenger Vehicle

21%Tractors2%

Const. Equip.0%


76%

Const. Equip.0%

Tractors3%

Passenger Vehicle17%

M&HCV2%

LCVs1%

SCVs1%

Market share: 2009

Market share: 2015(E) Market share: 2020(E)

Vehicle production in India – Segment wise market share

Source: SIAM – EY study

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“INDIA” – A Global hub for Compact CarsNew Plant Addition in the Last 1 Year

Increased local content - Creating Global CompetenceIncreased local content - Creating Global Competence

MarutiCapacity 250K

Investment US $ 380 mln

HyundaiCapacity Increased to 600K cars

Investment US $ 1 billion

Tata MotorsCapacity 500K


ToyotaCapacity 200K


FordCapacity 200K

Investment US$ 500 mln

General MotorsCapacity 140K

Investment $650 mln

Nissan-RenaultCapacity 400K

Investment USD 1 billion

VWCapacity 110K


HondaCapacity 60K

Investment $ 250 mln

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Indian Automobile Industry-High Growth in all Segments

April-July 2010(Unit in Nos.)

Category ExportsSegm/Subsgmt

2009-10 2010-11 % Gr. 2009-10 2010-11 % Gr. 2009-10 2010-11 % Gr.Passenger Vehicles ( PVs ) 682,287 898,429 32% 131,308 143,136 9% 696,890 899,795 29%

M&HCVs 57,324 105,446 84% 5,329 7,492 41% 60,318 103,276 71%LCVs 88,484 118,484 34% 4,858 12,404 155% 84,316 117,976 40%Commercial Vehicles (CVs) 145,808 223,930 54% 10,187 19,896 95% 144,634 221,252 53%

Three Wheelers 162,721 234,581 44% 37,044 89,637 142% 164,517 240,163 46%

Two wheelers 3,209,740 4,213,454 31% 327,381 528,794 62% 3,182,891 4,192,634 32%

Grand Total 4,200,556 5,570,394 33% 505,920 781,463 54% 4,188,932 5,553,844 33%

April-JulyApril-July April-JulySales (Domestic+Exports)Production

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Indian Auto Component Industry Focus: Global Best Practices

46

51

82

179

245

> 100 Million US $

> 50 ~ 100 Million US $

> 25 ~ 50 Million US $

> 5 ~ 25 Million US $

< 1 ~ 5 Million US $

Annual Turnover in Million US $

AC

MA

mem

bers

hip

(M

ore

than

60

0

mem

bers

)Significant number of companieswith Quality certifications & recognition:

• ISO 9000 : 552

• TS 16949 : 438

• QS 9000 : 33

• ISO 14001 : 204

• OHSAS 18001: 95

• JIPM: 3

• Deming Award : 11

• TPM Award : 15

• Japan Quality Medal : 1

• Shingo Silver Medallion : 1

Industry fast embracing modern shop-floor practices:

• 5-S; 7-W

• Kaizen

• TQM

• TPM

• 6 Sigma

• Lean Manufacturing

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13

37

9.0023%

8.1620%

3.80-

22.0020%

2009-10

182120182120Exports as % of Turnover

-3729242122Imports as % of Turnover

12.0033%

7.301%

7.2033%

5.4023%

4.4017%

3.7521%

InvestmentGrowth rate

6.8030%

3.808%

18.402%

2008-09

5.2245%

3.5232%

18.0020%

2007-08

--

3.6045%

2.4830%

1.9033%

ImportsGrowth rate(%)

5.0032%

2.678%

2.4746%

1.6934%

Export Growth rate(%)

26.0018%

15.0025%

12.0038%

8.7029%

TurnoverGrowth rate(%)

2010-11(E)2006-072005-062004-05

E -> Estimated

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

(Turnover includes supplies to OEMs, aftermarket sales and exports but sans imports. It does not take into account production for captive consumption by OEMs, components manufactured by non ACMA members whose majority supplies are non-automotive and the unorganized sector )

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Auto Component Industry: Size

Turnover (In US $ bln)

Turn

over

(U

S $

bn

)

Source: ACMA - EY Vision 2020

6.78.7

1215

18 18.4

22

26

29%

38%

20%

2%

20% 18%

25%

0

5

10

15

20

25

30

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-110%

10%

20%

30%

40%

Growth rate(%)

CAGR: 21%CAGR: 21%

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Body & structural40%

Electronics & electrical

10%

Engine & Exhaust20%

Interior10%

Suspension & Braking

10%

Transmission & Steering

10%

Product Range- 2009

Body & structural35%


13%

Engine & Exhaust17%

Interior9%


13%


13%

Product Range- 2015(E) Product Range- 2020(E)

Auto Component Industry: Product Range


Body & structural

31%


16%

Engine & Exhaust

18%

Interior8%


11%


16%

2222

Auto Component Industry – Exports & Exports Markets

1.21.7

2.5 2.73.5 3.8 3.8

547%

30%

9%

32%

8%

42%

0%0.0

1.0

2.0

3.0

4.0

5.0

6.0

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0%

10%

20%

30%

40%

50%

Exports Growth rate(%)

CAGR: 21%CAGR: 21%

Exports market size (In US $ bln)

Exports market

OEM/Trier-1: 80%

Aftermarket: 20%

Profile of ExportsAfrica7.4%

Asia28.1%

Australia1.1%Europe

36.9%

N.America24.0%

S.America2.5%

Expo

rts

(US

$ b

n)


23

1.4 1.92.5

3.6

5.2

6.8

8.245%

20%

33%

45%

30%31%

0.0

2.0

4.0

6.0

8.0

10.0

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-100%

10%

20%

30%

40%

50%

Imports Growth rate(%)

Imports market size (In US $ bln)

Auto Component Industry – Imports & Imports Markets

CAGR: 34%CAGR: 34%

Imports market

Asia54.34%

Australia0.22%

Europe36.03%

N.America8.28%

Africa0.20%

S.America0.92%

Impo

rts

(US

$ b

n)

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Auto Component Industry Investments

Investment (In US $ bln)

2.7 3.13.8

5.4

7.2 7.3

9.0

12.0

4.4 23%

33%

23%

33%

1%

17% 17%

21%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0%

10%

20%

30%

40%

Investments Growth rate(%)

CAGR: 20%CAGR: 20%

Inve

stm

ent

(US

$ bn

)


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Increased Component Outsourcing from India

Indian Components already Driving on your Roads…Indian Components already Driving on your RoadsIndian Components already Driving on your Roads……

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Vision 2020: Domestic Auto Component demand

4.3 8.4 12.825.7

60.6

100.2

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2009 2015(E) 2020(E)

Aftermarket OE

$ 30 bn

$ 69 bn

$ 108 -119 bn

In $

bn

23.5

17.1

25.6

6.410.7

17.1

2020(E)

Transmission & SteeringSuspension & BrakingInteriorEngine & ExhaustElectronics & electricalBody & structural

Component wise

46.9

4.34.312.8

21.3

6.44.3

2020(E)

Construction EquipmentsFarm Equipments2 & 3 WheelersHCVLCVSCVPassengers cars

Category wise


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Vision 2020: Domestic market potential for Indian Component Manufacturer

Component category wiseOE vs. Aftermarket

4.0 6.1 10.318.0

42.9

69.7

0.0

20.0

40.0

60.0

80.0

100.0

2009 2015(E) 2020(E)

Aftermarket OE

In U

S $

bn

$ 22 bn

$ 49 bn

$ 76 - 84 bn

8.8017.04

25.266.39

12.63

4.40

8.52

14.74

2.20

4.26

6.32

6.39

8.42

6.39

12.63

2.20

2.202.20

0.00

20.00

40.00

60.00

80.00

100.00

2009 2015(E) 2020(E)

Body & structural Electronics & electricalEngine & Exhaust InteriorSuspension & Braking Transmission & Steering

$ 22 bn

$ 49 bn

$ 76 - 84 bn

In U

S $

bn


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Vision 2020: India’s Exports Potential

Geography wise Component wise

1.063.6

10.58

2.32

4.2

12.90

0.42

1.7

4.02

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2009 2015(E) 2020(E)

North America Western Europe Other markets

$ 3.8 bn

$ 9.4 bn

$ 26 - 29 bn

In $

bn

0.40 0.85 2.081.50

5.00

1.60

4.27

12.50

0.40

0.85

2.710.00

5.21

0.60

0.00

0.00

0.80

1.92

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2009 2015(E) 2020(E)

Body & structural Electronics & electricalEngine & Exhaust InteriorSuspension & Braking Transmission & Steering

In $

bn

$ 3.8 bn

$ 9.4 bn

$ 26 - 29 bn


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India’s Auto Component Exports potential to North America and Western Europe in 2020


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Auto Component Industry’s contribution to employmentgeneration and to India’s GDP

260 420590

660

1040

1470

0

500

1000

1500

2000

2500

2009 2015(E) 2020(E)

Direct Indirect

920

1,460

1,950 – 2,1601 to 1.2 million

additional jobs

2.10%

2.90%3.60%

0.00%

1.00%

2.00%

3.00%

4.00%

2009 2015(E) 2020(E)

Employment in Auto-Component industryAuto-Component industry contribution to GDP

‘000

per

son

s


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Indian Component Industry Development Capability

During the development process, Tata Motors asked suppliers to think out of the box and innovate products and process design.

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.

“Hyundai i20, Made in India with European Design feel”

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

Hyundai exported 286K cars last year with a focus on Europe

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Some Design & Research Centers in India

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Challenges India is Committed to Address

Infrastructure Deficit

Talent Crunch

Scaling-Up the industry

Access to World-class Technology and Quality Practices

Remaining cost competitive

Access to and availability of cost-effective capital

Trade Policy

1

2

3

4

5

6

7

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Capabilities of successful niche Component Manufacturers

Cor

e C

apab

iliti

es

Design, engineering & validation

Strong R&D focus on specific pdts./technology

Customized solution

Innovation management

Manufacturing

Domestic manufacturing footprints

Operating smaller plants efficiently

Sales & marketing

Customer acquisition

Customer loyalty management

Enab

ling

Cap

abili

ties IT systems focused mainly at product design and development

Raising risk capital

Cash flow management Managing risk of launching innovative products

Information technology, Capital management, Risk management

Innovative recruitment techniques to attract talent

Talent retention

People and organization


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• Manufacturing

• Technology

• Research & Development

• Quality

• Environment

Areas of Cooperation

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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.

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The Addressable Opportunity…

• Establish Partners/JV in India for

- Engine & Exhaust parts

- Auto Electronics & Electrical

- Transmission & Steering

- Informatics & Telematics

- New Material

- Simulation Technology

• Collaboration for Manufacturing Excellence and Process Design

• Production Sharing in India & Europe for a Holistic Service Capability

• Partnering for Global Requirements

• Merger & Acquisition

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Conclusion

• Vibrant Indian Economy

• Automotive Industry showing double digit growth in all segments

• India becoming Global and Regional hub or lead country for vehicle programmes

• Vision 2020

• Growing engineering and IT capability for manufacturing

• Auto Component Industry :Culturally compatible-Quality, Experience and Values

• Opportunity to partner in product & process innovation

India : A Gateway to GrowthIndia : A Gateway to Growth

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ACMA Head OfficeThe Capital Court, 6th Floor, Olof Palme Marg, Munirka,

New Delhi – 110 067Tel: 011-26160315, 26175873, 74

Fax: 011-26160317E-mail: [email protected]

Website: www.acmainfo.com

INDIAN AUTO COMPONENT INDUSTRY AN OVERVIEW - ACMA

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