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India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year.[1] It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009.[2] India's passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010.[3] According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12.[4] In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.[5] As of 2010, India is home to 40 million passenger vehicles and more than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world.[6][7] According to the Society of Indian Automobile Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020.[8] By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.[9] A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India"[10] with the India operations of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60 per cent of the country's automotive exports.[11] Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured.[12] The Chakan corridor near Pune, Maharashtra is another vehicular production hub with companies like General Motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors[13][14] having assembly plants in the area. Ahmedabad with the Tata Nano plant, Halol again with General Motors, Aurangabad with Audi, Skoda and Volkswagen, Kolkatta with Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive manufacturing regions around the country.
Overview
The Indian Automobile Industry is manufacturing over 11 million vehicles and exporting about 1.5 million every year.[18] The dominant products of the industry are two wheelers with a market share of over 75% and passenger cars with a market share of about 16%.[18] Commercial vehicles and three wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes.[18] The industry has attained a turnover of more than USD 35 billion and provides direct and indirect employment to over 13 million people.[18] The supply chain of this industry in India is very similar to the supply chain of the automotive industry in Europe and America. This may present its own set of opportunities and threats. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the
sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. Note that, with a high cost of developing production facilities, limited accessibility to new technology and soaring competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzuki have material cost of about 80% but are recording profits after tax of about 6% to 11%.[18] The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, Indias increasing per capita disposable income which is expected to rise by 106% by 2015[18] and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%.[18] Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%.[18] Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26%[18] of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower, infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilising manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favourable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles.
[edit] History
The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly, but in very small numbers.
Embryonic automotive industry emerged in India in the 1940s. Mahindra & Mahindra was established by two brothers as a trading company in 1945, and began assembly of Jeep CJ-3A utility vehicles under license from Willys.[19] The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.[20] Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.[21] In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.[21] Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which has attracted significant India-specific investment by multinational automobile manufacturers.[22] In February 2009, monthly sales of passenger cars in India exceeded 100,000 units[23] and has since grown rapidly to a record monthly high of 182,992 units in October 2009.[24] From 2003 to 2010, car sales in India have progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in Switzerland for example [25]) this progression is unlikely to stop in the coming decade.[26] Congestion of Indian roads, more than market demand, will likely be the limiting factor.[27] SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and international, in India.[28]
The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and America. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and goes through the automakers and climbs up until the third tier suppliers. However the products, as channelled in every traditional automotive industry, flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are responsible for the products and innovation in the industry. The description and the role of each of the contributors to the supply chain are discussed below. Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminium to the second tier suppliers. Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their services may include welding, fabrication, shearing, bending etc. First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in order to follow their customers to various locations around the world. They design and innovate in order to provide black-box solutions for the requirements of their customers. Black-box solutions are solutions created by suppliers using their own technology to meet the performance and interface requirements set by assemblers. First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axelsuspension, seats, or cockpit but also for the management of second-tier suppliers. Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers wants and needs, automakers begin designing models which are tailored to consumers demands. The design process normally takes five years. These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these companies. Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorised dealers of the companies. The dealers then sell the vehicles to the end customers. Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers. Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers.
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999
2,814,584 2,175,220 1,846,051 1,713,479 1,473,000 1,264,000 1,178,354 907,968 703,948 654,557 517,957 533,149
29.39 17.83 7.74 16.33 16.53 7.27 29.78 28.98 7.55 26.37 -2.85
722,199 466,330 486,277 540,250 546,808 362, 755 332,803 253,555 190,848 160,054 283,403 285,044 2005-2006 9,743,503 26,969 806,222 2,231
54.86 -4.10 -9.99 -1.20 50.74 9.00 31.25 32.86 19.24 -43.52 -0.58 2006-2007 11,087,997 30,507 1,011,529 2,552
3,536,783 2,641,550 2,332,328 2,253,999 2,019,808 1,628,755 1,511,157 1,161,523 894796 814611 801360 818193 2007-2008 10,853,930 32,383 1,238,333 3,008 2008-2009 11,175,479 33,342* 1,530,660 3,718*
33.89 13.25 3.35 10.39 19.36 7.22 23.13 22.96 8.96 1.62 -2.10
Year 2004-2005 [18] Motor Vehicle Production 8,467,853 Industry Revenue[18] 24,379 [18] Exports (Units) 629,544 [18] Exports (Revenue) 1,915
Passenger Vehicles [18] 166,402 Commercial Vehicles [18] 29,940 Three Wheelers [18] 66,795 [18] Two Wheelers 366,407 Total 629,544
Mopeds (%) Electric Two Wheelers (%) Total Two Wheelers[18] (%) Grand Total[18] (%)
16 states and 1 union territory had over a million new vehicles registered. Tamil Nadu had about 16 million new vehicles registered, Maharashtra had over 13 million, and Gujarat had over 10 million. About 91% of these vehicles are non-commercial vehicles purchased by households looking for a two wheeler, or a car. Only about 9% of new vehicles registered are used for commercial purposes. Details of category wise new vehicle registrations in the various states and union territories are displayed. The number of new vehicles registrations has grown by about 66% in the past five years.
[edit] Geographical Segmentation:State-wise motor vehicles registration in India from 2001 - 2008
2001 (in '000) Andhra Pradesh 3,966 Arunachal Pradesh 21 Assam 542 Bihar 949 Chhattisgarh 857 Goa 341 Gujarat 5,576 Haryana 1,949 Himachal Pradesh 217 Jammu & Kashmir 330 Jharkhand 909 Karnataka 3,537 Kerala 2,112 Madhya Pradesh 3,095 Maharashtra 6,760 Manipur 77 Meghalaya 62 Mizoram 31 Nagaland 160 Orissa 1,096 Punjab 2,910 Rajasthan 2,943 Sikkim 12 Tamil Nadu 5,162 Tripura 50 Uttarakhand 364 Uttar Pradesh 4,921 West Bengal 1,690 Andaman & Nicobar 25 States\Year 2002 (in '000) 4,389 21 596 1,024 948 366 6,008 2,122 244 364 984 3,636 2,315 3,173 7,414 90 67 34 177 1,215 3,103 3,197 13 5,658 57 406 5,171 1,690 28 2003 (in '000) 5,002 21 657 1,121 1,076 397 6,508 2,279 269 399 1,101 3,738 2,552 3,459 8,134 97 73 37 162 1,359 3,308 3,487 15 8,005 66 457 5,928 2,366 28 2004 (in '000) 5,720 21 727 751 1,216 436 7,087 2,548 289 439 1,217 3,977 2,792 3,804 8,969 106 73 42 172 1,525 3,529 3,834 17 8,575 76 516 6,460 2,548 28 2005 (in '000) 6,446 21 798 726 1,367 483 7,892 2,883 329 493 1,341 4,338 3,180 4,119 10,055 114 78 48 186 1,717 3,859 4,285 19 10,085 85 580 7,271 2,816 31 2006 (in '000) 7,232 21 883 694 1,536 537 8,785 3,267 375 556 1,479 4,717 3,612 4,442 11,281 123 84 54 201 1,936 4,225 4,791 21 11,901 95 651 8,144 3,138 34 2007 (in '000) 8,042 21 973 647 1,726 585 9,633 3,689 421 628 1,630 5,036 4,034 4,710 12,477 134 89 61 215 2,159 4,571 5,281 23 13,860 105 732 8,970 3,464 38 2008 (in '000) 8,989 21 1,086 593 1,939 638 10,543 4,164 480 719 1,796 5,360 4,564 4,968 13,817 145 95 70 230 2,417 4,992 5,815 25 16,207 117 822 9,919 3,833 42
Islands Chandigarh Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry
Ar un ac hal Pr ad esh
M Ma an har ip asht ur ra
Me gh ala ya
Mi zo ra m
W est Be ng al
Multia xled/A rticulat ed Vehicl es/Tru cks & Lorries Light Motor Vehicl es (goods )
1, 24 14 83 30 28 18 14 41, 29 100 73, 77, 41, 50, 75, 17 94, 27 6, 2,3 40,4 62, 243, 5,9 14, 3,2 6 9,79 1, 3,1 ,1 ,5 ,3 2,3 7,6 64 ,9 ,59 31 17 01 49 92 3,5 48 6,2 32 23 13 566 113 63 028 15 1 9 03 47 89 16 26 04 67 4 58 6 5 8 9 6 1 52 2 35 1 9 5
15, 10 10 4, 45, 20 67, 24, 13, 18, 55, 4 66 2,04 9,3 4,8 9,5 29, 49,0 2,4 2,8 84 3,5 Buses 49 ,2 ,9 86 66 ,1 20 62 96 57 93 0 5 3 69 72 39 710 92 03 27 0 05 8 86 61 8 9 39 6 6 6 9 6 6 4, 81, 10 14 8, 40, 14, 14, 10 11 61, 24, 11, 32, 29 22,0 21, 40, 102, 36 5,0 3,8 4,4 9 Taxis 62 ,3 ,0 27 10 99 97 ,3 4,2 42 61 98 86 9 05 814 839 475 3 30 64 48 4 7 68 00 3 0 0 0 25 45 4 4 2 8 7
Light Motor 26 29 9, Vehicl 1,4 3,3 ,8 50 es 30 25 06 7 (passe nger) 14 Total 57 97 5,2 7, Comm 0,4 ,2 72 96 ercial 88 80 6 4,5 41 46 Two 10, 43, 8, 9, Wheel 60 28 78 75 ers 5 3 0 1 10 39 27 2,3 6, Cars 7,7 ,5 40 06 38 08 3 Jeeps 58, 14 21 2,2 11 ,2 ,7 60 4 66 26 3, - 25 9 10 77 ,2 ,8 80 48
9, 27 37, 14 190 29 45, 21, 36, 64, 15 12 78, 38 7,47 2,7 36, 6,79 493, 2,5 2,9 1,1 8,2 37 6,9 84 ,2 ,36 4,2 14 89 83 58 - 4,1 ,1 06 ,2 4 83 257 9 142 21 34 45 91 5 08 1 55 2 44 6 3 8 0 92 62 7 89 7, 50 74 26 66, 86 130 453 68 23 1,14 12, 10, 66, 14 17 34 82 20 88,6 24, 3 ,8 9,3 8,1 60 ,9 ,17 ,26 5,1 8,4 3,90 45 31 50 6,5 7,9 0,5 8,0 ,9 21 819 2 42 17 92 9 49 6 2 91 04 4 6 9 6 12 65 37 21 31 5 30 5,1 1,5 25 1,5 2,8 1,2 2,5 2,6 4, 6,7 15 937 2,7 6,21 75, 19, 36, 44 991, 9, 62, 26, 3, 95, 76, 21, 23, 87, 92, 6 34, 2,2 ,74 32, 6,79 33 50 74 ,2 022 48 16 40 61 80 19 050 57 18 17 8 20 86 5 674 4 3 1 1 41 8 7 4 1 8 1 3 1 5 2 5 1, 71 57 27 51, 74 418 37 14 33, 62, 26 20 73 8, 43,5 92, 8 924, 8,0 14, 4,8 ,5 2,4 2,8 91 ,1 ,18 8,9 8,0 27 55 7,3 3,9 1,3 67 72 171 7 006 30 595 50 16 14 95 8 87 1 12 30 3 3 79 91 80 2 0 2, 11 87, 12, 10 71, 36, 21, 26, 32, 12 53, 7,30 23, 41, 8 262, 7,8 9,4 6,7 - 0,9 20 33 ,6 65 28 64 52 79 8,0 98 2 419 024 6 741 72 01 65 43 3 1 93 6 2 9 7 7 56 7 3 30, 4 19, 1,3 2,7 36, 12,6 57 20 2,2 44 - 48 - - - 8 95 45 65 513 09 0 7 38 8 7 7 27 37 10 119 32 30, 45 40 90, 44,3 47 3,8 15, 9,0 201, 1,2 20 1,8 14 5,5 3,3 ,9 ,34 8,3 441 59 9,0 7,5 9 88 21 0 98 136 04 940 63 9 27 7 43 73 69 0 80 2 14 23 6 3 19 12 120 16 19 24, 57, 9, 38,8 9, 56 1,9 2,3 69 41 1,0 89 - 62 ,5 ,18 4,9 0,6 580 254 18 01 - 9 04 60 1 13 04 6 0 15 8 12 5 33 28 1 3 1 3 0 3, 16, 17, 1, 19, 11, 11, 76, 2,10 1,6 5,7 55, 16,1 22 24 8,8 4,3 4,5 54 80 15 07 62 10 30 772 01 - 89 3 65 99 405 11 1 7 06 54 11 1 4 8 8 6 2 8 8 5 38 6,3 2,2 35 2,1 3,5 1,3 3,3 3,4 9, 7,7 1,12 22 1,0 3,5 31, 10 54 7,82 93, 5, 38, 79, 1, 06, 65, 48, 78, 51, 93, 9 47, 7,12 2,2 86, 23, 82 5,4 ,6 4,82 86 27 17 71 64 88 12 563 47 13 26 1 22 4 04 782 322 9 6 11 16 9 8 3 8 7 3 4 0 5 9 1 0
28 38 40,2 6,8 8,6 71 60 27 4,9 1,5 391, 22, 81, 251 04 32 7 6 39 49 42,2 1,4 4,5 20 43 05 97, 6,45 82 2 1 14, 787 73 6 71 31,9 8,0 81 82 10,0 21 19, 2,12 18 2 8 6,1 475, 73, 711 33 8 35, 16 4 2,1 59, 33 6 48, 34 1
46, 8, 50 Trailor 15 88 74 ,4 s 5 5 0 03 20 2, 4,5 17 Others ,7 92 00 9 24 8 Total 5,1 57 65 15, non- 49, 8, 3, 87 comme 43 85 42 2 rcial 2 3 3
Multiaxled/Articulated 1,519 Vehicles/Trucks & Lorries Light Motor Vehicles (goods) Buses 459 Taxis 436 Light Motor Vehicles 784 (passenger) Total Commercial 3,198 Two Wheelers 21,743 Cars 1,693 Jeeps 1,033 Omni Buses Tractors 261 Trailors 67 Others 461 Total non-commercial 25,258
270 408
6,588 2,923 1,831 1,421 4,283 17,046 235,438 47,642 3,838 2,545 318 1,582 4,541 295,904
233,212 678 2,665,750 3,978 1,192,389 78 122,283 85 8,386 5 4,851 44 99 9,705 503 4,003,463 4,693
Exports
Mahindra Scorpio Jeep in service with the Italy's CNSAS. India's automobile exports have grown consistently and reached $4.5 billion in 2009, with United Kingdom being India's largest export market followed by Italy, Germany, Netherlands and South Africa.[30] India's automobile exports are expected to cross $12 billion by 2014.[31] According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuelefficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki.[32] In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011.[33] Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.[34] In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export.[35] The company said that
the plant was a part of its plan to make India the hub for its global production business.[36] Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.[37] In July 2010, The Economic Times reported that PSA Peugeot Citron was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation.[38] PSA's intention to utilise this production facility for export purposes however remains unclear as of December 2010.
A Tata Safari on display in Poznan, Poland. In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign carmakers 100% ownership of factories in India, which China does not allow.[5] In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project.[39] While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.[39]
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