Professional Documents
Culture Documents
Presented by, Richa Lather Sonali Sarkar Ankit Kumar Tiwari Prakhar Rajvanshi Gaurav Mehra
CONTENTS
1983-1993
Japanisation - GOISuzuki joint venture to form Maruti Udyog Joint ventures with companies in commercial vehicles and components Players Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra
1993-2007
Delicensing of sector in 1993 Global major OEMs start assembly in India (Toyota, GM, Ford, Honda, Hyundai) Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels Implementation of VAT
Location
Chennai and Pune are the traditional locations of the industry. Delhi and its surrounding areas are the new locations that came into existence mainly because of Maruti . The geographical spread of medium and large companies as per records of ACMA is as under
North region 161
Western region
123
Southern region
91
Eastern region
27
Structure
The table below shows segment-wise distribution of the auto component Industry www.acmainfo.com.
Organized Component Manufacturers Strengths
1.Higher production capacities 2. Captive OE market 3. Access to technology through tie ups 4. Quality standards 5. Potential to export 6. Improving quality consciousness of end users 1. High Investment in plant and machinery 2. Higher overheads 3. Higher rates of taxes and differential regional tax patterns 4. Limited domestic OE volumes
Weaknesses
Market overview
The size of the auto components industry has been estimated at US$ 19 billion in 2008 09, growing at a compound annual growth rate (CAGR) of about 23 per cent over the previous five years. The industry is expected to grow to US$ 40 billion by 2016. Among the 6,400 players present in the Indian market, only 600 constitute the organised sector and contribute more than 77 per cent of the country s total production of auto components.
AUTO
EXPORT MARKET
Despite a relatively small share of Asia in the global pie, India is now amongst one of the most preferred destinations and has come to occupy the image of an exporting hub for most of the major global OEM players. Almost all the big auto manufacturers of the world are either already or are in the process of outsourcing from the country. Hyundai Motors India Export base for small cars Ford Motors India exporting CKDs of Ikon to South Africa and other countries Skoda India Hub for exports of cars to neighboring countries General Motors Global Purchasing Team Volvo Global buying team Delphi International purchase office Renault scouting for truck part suppliers
INDIAN SCENARIO
Global hub of auto components Why India? developing country low cost advantage (25-30%) skilled labour developing markets Problems FTA, RTA Tax, raw materials, poor infrastructure
Advantage India
Largest Two-Wheeler Manufacturer in the World 2nd Largest Tractor Manufacturer in the World 5th Largest Commercial Vehicle Manufacturer in the World Largest Global Motorcycle Manufacturer is in India 4th Largest Car Market in Asia - crossed the 1 million mark
GLOBAL SCENARIO
Leading position in the global economy Major countries producing auto components :- China, Mexico and Taiwan Key industry drivers:y Provides support to other industries(iron, steel, plastic, glass) y Huge investments in developing countries y Investment in R&D y Increased standard of living y Infrastructural developments
Key trends in the industry Global car sales in the road to recovery Auto production bases are shifting to Asia Profitability of auto makers is under pressure; innovation still not sacrificed green imperative for components Welcoming new players in the industry Long term partnerships The industry size, investments, exports etc., are showing an increasing CAGR The future of this sector shows tremendous growth opportunities (ASEAN Treaty)
Contd .
MICO y Diesel engines y CRDI based diesel systems y Collaboration with Bosch OMAX AUTO y Chassis manufacturing y Reduced operation costs (OMAX steel) SONA KOYO y Power steering systems y C-EPS systems CLUTCH AUTO y India s largest clutch manufacturer and exporter y OEM and replacement markets y TATA, Mitsubishi, Mahindra etc . Are the clients
Class Segregations
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)
Quality Certifications
244 Companies with ISO-9000 Certification 11 Companies with IS-14000 Certification 107 Companies with QS-9000 Certification 4 Companies with TS 16949 2 Deming Prize Winning Companies
Economic Factors
1 year
Increased access to credit and lower interest loans
1-5 year
Investment in Infrastructure spending can boost the commercial vehicles segment.
5-10 years
Growing working population (441 million people in 2015/16) Upward migration of household income levels (600 million people have annual income of more than $10,200) Middle class expanding by 30 - 40 million every year
Economic Factors
1 year
Impact of delayed monsoon (85% of normal, subsequent impact on paddy cultivation) on rural demand.
1-5 year
5-10 years
Non- availability of supplier base with demanded capability (Quality and Quantity). Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day) Increase in crude oil price($ 35/barrel to $ 70/ barrel in 14 months).
Non-availability of Key raw material (like Steel) at cheap price. Possible increase of interest rates (by 2-2.5% BPLR) because of planned government borrowing.
Social Factors
Rapid Urbanization of semi urban regions Rising aspirational levels. Improvement in living standards of middle class Increased spending on Fashion & lifestyle comforts. Seeking Value for money- consumer behavior Increasing customer emphasis on aesthetics and comfort.
A perfect marriage of rise in disposable income and demographic dividend (From US$ 556 per annum US$ 1150 by 2015)
ISSUES
Compliance with OEM s Norms and auto manufacturers Pressures of Working Capital Resistance from Unions Conflicts with Collaborators Greater Inventory Costs High Logistics Costs
Difficulty in making suppliers to agree with their requirements
CHALLENGES
Best manufacturing practices Quality consciousness Strict Adherence to delivery schedules World-class testing and Validation facilities
WEAKNESS
Industry is exposed to cyclical downturns in the automobile industry High capital requirement R & D capabilities is not at par with global standards
THREATS
Import duty fluctuations China Pressure on prices Downturns in automobile industry
STRENGTHS
The industry is globally cost effective Adheres to strict quality controls Has access to latest technology Provides support to critical infrastructure and metal industries Ability to cater to low volumesx
OPPURTUNITIES
Sourcing hub for global auto majors MNCs focussing on low cost outsourcing opportunities India and China are the two major countries developing in this industry Developments in automobile industry
India offers more than 20% cost reduction to any client and hence Global OEMs tempted to outsource to India
Quality Certification (Deming, Six Sigma,TQM,TS16949) amongst suppliers have attained critical mass and the entire market will follow to get quality certifications. Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisition services Alternate fuel (Bio fuel, electricity) and environment friendly green engines (Bharat emission norms)
References
www.acmainfo.com www.wikipedia.org www.siamindia.com www.ibef.org Ernst & Young Auto Track www.economywatch.com www.business-standard.com The Economic Times Hindu Business Line www.automobileindia.com automobiles.mapsofindia.com