Auto and Auto Components - 4x growth expected in the next 10 years

1. Auto and Auto Components -
4x growth expected in the next 10 years

2. © Confederation of Indian Industry
Content
 Sectoral Overview
 The Potential
 Current Growth Drivers
 Major Challenges faced
2

3. © Confederation of Indian Industry 3
Sectoral Snapshot
6th Largest Globally
by production (~23.3
Million)
7%
Sector’s
Contribution to GDP
100% FDI
allowed under
automatic route
~45%
Sector’s
Contribution to
Manufacturing GDP
~9%
of total FDI captured by
Auto Sector
(Jan 14 – Jun 15)
~19 Million
employment generated
by sector
Source: SIAM, ACMA, FDI Markets
FDI – Foreign Direct Investment

4. © Confederation of Indian Industry 4
Evolution of Sector – Automobiles
1897 –
First Car
on Indian
Roads
Early-mid
20th Century
– Market
dominated
by Premier
and
Hindustan
Motors
1981 –
Inception of
Maruti Udyog
Limited
1991 – Post
Liberalization
foreign players
like Toyota,
Hyundai,
Honda etc.
entered the
Indian market
2016 - Indian
Automobile
industry soon
to be third
largest
Automotive
market in the
world by
Volume

5. © Confederation of Indian Industry 5
Evolution of Sector – Automotive Components
1980 - 2000 –
Proliferation of
SME’s as demand
for passenger cars
and motorcycles
increases
In 2000s – new
entries decelerated
due to necessity of
high technology
which raised the
initial investment
amount, but
exports of Auto
Replacements
increased as a
result.
2009- 2015 sector
consistent growth
of ~ 11% and is
poised to be a
USD 115 Billion
industry by 2020-
21

6. © Confederation of Indian Industry 6
Advantage India
Strong Demand
- All major sub-segments are likely to
grow ~ 5-10% yoy for next 5 years
owing to domestic demand and
strong export potential
High Competitiveness
- Both OEMs and Component
manufacturers have developed
strong core capabilities and are
globally competitive
Conducive Regulatory
environment
- Industry and Government are
broadly aligned on the importance
of the sector and support its growth
Potential
- As per the Automotive Mission Plan II 2016-2016 the Auto and Auto
Component industry is likely to grow 3-4 times from ~USD 70 Billion to
USD 280 Billion in the next 10 years
OEMs – Original Equipment manufacturers

7. © Confederation of Indian Industry 7
Segment-wise Snapshot
Industry CAGR (2015-2025)
Heavy Commercial Vehicles (HCV) 8.4%
Two & Three Wheelers 8.1%
Passenger Vehicles 11.3%
Automotive Batteries 6.0%
Auto-Electricals & Electronics 12.3%
Sector CAGR (2007-2015)
Automobiles 11.72%
Automotive Components 12.08%1
Source: SIAM, ACMA, TechSci Research, Frost and Sullivan
1 Figure is for period of 2008-2016 (expected)

8. © Confederation of Indian Industry 8
Current Growth Drivers
Policy and Eco-system
1. The Automotive Mission Plan 2006-16 (AMP I
2016) and AMP II – 2016-2016 outline the
growth aspiration and roadmap for the sector to
help align goals of government and industry
2. DHI’s FAME scheme aims at promoting faster
adoption of electric vehicles.
3. Support for development of Auto Electronics
through the NEMP scheme
4. NATRIP helps industry to adopt and implement
global performance standards
Industry Evolution and Capabilities
1. Capabilities across value chain from vehicle to
component manufacturing
2. Several world class Tier 1,2,3 suppliers, with
significant number of Deming Awardees.
3. Four large auto manufacturing hubs across the
country
4. India is the leading hatchback and sub 4 metre
passenger vehicle manufacturer
5. One of the largest tractor manufacturers in the
world
Market Dynamics
1. 2wheeler and 3 wheeler - The top 5 players hold 87.3% of the market share.
2. HCV industry – Competition has increased with entrance of new OEMs. Overall market is highly
concentrated, where top 5 companies form up to 85% of market share
3. Auto Electricals – Market concentration is low in this sector compare to other Automotive sectors. Top
5 players hold 60% market share.
4. Auto Batteries - The market is highly concentrated, where 70% is held by top 5 companies.
Source: Frost and Sullivan

9. © Confederation of Indian Industry 9
Major Challenges faced by sector
Environment and
Sustainability
Global Eco-system
Regulatory
• Creation and adoption of eco-system and technologies
for implementing BS VI fuel norms
• Organized mechanism for scrapping of old vehicles
• Eco-system challenges for adoption of Green
technologies
• Component manufacturers face severe threat from
Chinese manufactures for the global market
• Volatility in fuel prices
• Sluggish global economy
• Customs duty on high-end vehicles and transfer pricing
issues
• Significant excise duty
• Ban on high capacity Diesel cars
BS VI – Bharat Stage 6