1

India Automotive Industry Update

Robert C. Strain, Jr Director, GMIO Logistics

2
Misperceptions Of The Automotive Industry
• Stagnant / non–growth sector

• Unprofitable

• Receding in importance to consumers

• 20th Century technology / going the way of the

horse and buggy

3
Automotive Growth Opportunities
Per Capita Passenger Car Penetration
600 (Per Thousand Population) : 2005
Cars per thousand population

500
500 480 480
440
A huge potential
400 Low vehicle penetration (8.5
per 1,000), large 2 wheeler
population
300

200 180
147
122 130
90
100 .5
27
8 .5 17 10 12 13
0

Germany
UK
India

Indonesia
China

Thailand

Malaysia
Sri Lanka

Mexico

Japan
Philippines

Brazil

USA
Singapore

South Korea

4
Emerging Markets – Remain Unchanged
Poland Russia

China

Turkey
Thailand
Mexico

India
Brazil
Indonesia

South Africa

5
India Automotive Industry Growth
6000
5000
4000
In '000s units

3000
2000
1000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Cars 1023 1178 1199 1391 1565 1633 1907 2222 2567 2924 3286 3639
Trucks 727 811 772 783 825 817 943 1078 1233 1376 1564 1761
Industry 1750 1989 1971 2174 2390 2450 2850 3300 3800 4300 4850 5400

6
India Automotive Industry Market

GM
Mahindra

Hyundai

Tata

Suzuki

7
India Automotive Market Indicators
OwnershipTota
cycle – Industry average (months)
Industry Car Ownership Cycle-Time Trend (Average Months)

Reducing Ownership
Cycle
61 58 54 53 51

2002 2003 2004 2005 2006

Buyer Maturity Trend (%)

100% 3%
8% 8%
15% 13%
90%
80% 25% 24% 34%

Increasing Multiple Car

30%
70% 31%

60%

House-holds
50% 37% 40%
35%
40% 30% 32%

30%
20%
31% 28% 27%
25% 26%
10%
0%
2002 2003 2004 2005 2006

Replacement car Additional new car

First time car First time first hand car

Source: TNS Automotive – 2006 Total Customer Satisfaction Study

8
India Automotive Customer Needs
1. Extremely Value Conscious – acquisition price has to be low

2. High Fuel economy – both in running and idling condition

3. Styling – looks are very important. Outdated designs rejected outright

4. Rugged Suspension – ruggedness over ride quality

5. High ground clearance – to avoid engine sump protection plate

6. Strong Air conditioning – quick cooling for tropical summers. engine overheating in traffic & idling.

7. Low cost of ownership –in terms of cost of scheduled services, cost of repair and spares

8. Good launch feel – on account of high traffic quick throttle response at low rpms is appreciated

9
GM India Key Product Portfolio

Chevrolet Spark Chevrolet Optra Magnum Chevrolet Captiva

Chevrolet Aveo U-VA Chevrolet Tavera Chevrolet Cruze

Chevrolet Aveo

10
 Supply Chain Has a Key Integration Role
Manufacturing
Plants

Purchasing Global Supply Sales

Suppliers Chain Market

Engineering
Product

Right Part & Vehicle at the Right Place at the Right Time and at the Right Cost

11
AP Supply Chain Environment

12
GM India – New Production Facility Pune
Start of Production – 2008/Q3
Small Passenger Car
Capacity – 127k annually
300 Acre Facility

Paint
GA
Body

13
India Supply Chain Complexity

14
Supply Chain Supplier Traits

Superior Superior
Superior
Culture + Organizational
Capability
+ Competitive
Advantage

 “Can Do” attitude  Bring Best-in-Class  Quality

designs performance
 Obsessed with
continuous  Breakthrough  Flawless launches
improvement technology
 Sustainable cost
 Saying “No” the  Go Fast advantage
right way
 Best-in-Class
value
Sustainable Contributions and Value
15
Logistics Cost Drivers
Vehicle Distr. Center
Cube Utilization
Network Optimization
Supplier Location
Kitting/Sequencing
Miles Dealer Location
Plant Location
Catastrophic Events
Number of Parts & Suppliers
Production Schedule (Vol & Mix)
Logistics
Cost Sourcing

Government Regulations

Mode Selection
Carrier Financial Stability
Rates Demand
Network Capacity = Logistics Can Control
Fuel = Logistics Can Influence
No. of Competitors = Logistics Cannot Influence

16
 Fuel

Source: U.S. Department of Energy, Energy Information Administration/Platts Bunker Wire

17
2008 Global Supply Chain Key Metrics
¶Lost Production due to Part Shortages
¶Parts Missed at Operation due to Part Shortages
¶Direct Material Inventory
¶Total Premium Freight Cost
¶Logistics Net Performance

18
GM Global Purchasing and Supply Chain
Key Priorities
• Develop & Execute Best Supply Chain
Capabilities
• Total Cost Approach Supporting
Quality/Cost Improvements
• Launch New Programs @
Right Quality, Right Time, Right Cost
• Best Landed Cost Globally

19
Q&
A
20