auto component industry
TRANSCRIPT
AUTO COMPONENT INDUSTRY
Presented By Group 7:
Vivek Kapoor (45)Samrat (30)
Allen SangeethAnkit Jain
Niraj SinghSudhanshu
Contents:HISTORICAL ASPECTCURRENT SCENARIOGLOBAL SCENARIO
Major Acquistions
GROWTH POTENTIALGOVERNMENT INITIATIVESFDIMajor PlayersIndustry StatisticsSWOTCHINA and INDIACONCLUSION
HISTORICAL ASPECT…Initially, the Indian Auto Component Industry wasnot competitive enough for the global market due toits:- Inferior quality Lower labour productivity High cost of raw materialsProtectionist policies of Indian governmentLimited demand from vehicle manufacturers
However, a change came after the liberalization of the India economy in 1991 with:Abolition of licensingApproval given to up to 51% foreign investment
CURRENT SCENARIOIndian auto component industry is emerging as a global manufacturing hub for auto component manufacture.India has the potential to manufacture a range of automotive components (about 20,000 in numbers) - from fasteners to engine parts.The exports are expected to reach US $ 5 Bn by 2010.Sales for domestics car production in 2009 was 10 mn.
Around 500 organized players account for the 77% of the value added in the sector.
· Unorganized players are mainly replacement market players or tier ¾ component manufacturers
· Automotive Manufacturers Association of India (ACMA) represents the auto component industry in India and has around 600 registered members.
The following are the major automotive clusters:
· Western India: Mumbai - Pune - Nasik – Aurangabad
· Southern India: Chennai – Bangalore -Hosur
· Northern India: Delhi-Gurgaon – Faridabad
Localization of Companies
GLOBAL STANDING…•Indian manufacturers are gaining recognition as “global quality” players.•India shared 0.9% of the global Auto Components Industry in 2005-06.•India’s share in world auto components could grow from 0.9% in 2005-06 to over 2.5% by 2015
Acquisitions made overseas are helping Indian auto component companies get access to new technology and
customers and increase in India’s global presence.
Indian Company
Acquired Country Acquisition value
Tata Technologies
Incat International
UK US $ 95 mn
Bharat Forges Imatra Kilsta Sweden US $ 56 mn
Amtek Auto GWK UK US $ 37 mn
Amtek Auto Zelter Germany US $ 36 mn
Bharat Forge Carl Dan Peddinghaus
Germany US $ 35 mn
EL Forge Shakespeare Forging
UK US $ 28 mn
Ucal Fuel Systems
Amtec Precision
USA US $ 28 mn
GROWTH POTENTIAL…•India amongst the most competitive manufacturers of auto components, especially:• Metal intensive components:
forgings,stampings,castings.• Skilled labour-intensive components:
machining, wiring-harness etc.• Hi-tech components: electronic fuel
injectors.•Opportunity to address the global Auto Components market while leveraging India’s large and growing domestic market•Opportunity to set up R&D centres in India• Indian technical skills is acknowledged as
among the best in the world•High level of sourcing of auto components from low cost countries (LCC’s) to act as a driver for growth.
GOVERNMENT INITIATIVES…100% FDI [allowed through the automatic route.
Reduction in the duty of raw material to 5-7.5% from the earlier 10%.
Setting up of R&D Infrastructure Project.
Incentives provided to the exporters
FOREIGN DIRECT INVESTMENTThe auto parts industry with a turnover of US$15 billion offer excellent scope for FDI.
Automatic approval for foreign equity investment upto 100 per cent of manufacture of automobiles and component is permitted.
The Import of components is freely allowed.
MAJOR PLAYERS…Domestic Private Players:Bharat Forge Limited Tata Auto Component Systems Sundaram FastenersBrakes IndiaInternational Private Players:MICO Visteon Delphi
Annual Component Industry Turnover: 2009-10
(In US $ Billion)
(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)
•Significant growth in the auto sector drives auto component consumption•2010-11: Industry turnover to cross USD 26 billion growing 18%
Auto Component Industry Product Range
31%
19%
12%
12%
10%
9% 7%
Product Range
Engine Parts Drive Transmission & Driving Parts
Body & Chassis Suspension & Brak-ing Parts
Equipments Electrical Parts Others
Auto Component Industry Exports(In US $ Billion)
• Profile of Exports - OEM/Tier 1: 80%; Aftermarket : 20%• 2009-10: Exports growth flat due to slow offtake in North America and Europe
Export Markets
40.40%
22.60%8.00%
23.80%
1.30% 3.70%
Export Markets
EuropeN. AmericaAfricaAsiaAustraliaS.America
Auto Components Industry Imports(In US $ Billion)
Capacity Addition (In US $ Billion)
Auto Component Industry Performance2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
TurnoverGrowth Rate(%)
8.729%
1238%
1525%
1820%
18.402%
2220%
ExportGrowth Rate(%)
1.6934%
2.4746%
2.678%
3.5232%
3.808%
3.80-
ImportGrowth Rate(%)
1.9033%
2.4830%
3.6045%
5.2245%
6.8030%
8.1620%
Investment 3.75 4.40 5.40 7.20 7.30 9.00
(In US $ Billion)
Cost competitiveQuality
Access to latest technologySupporting
infrastructure and metal industry
Low level of R and D capabilities
Dependence on foreign majors for
technologyExposure to cyclical
downturns
May serve as a sourcing hub
Export OpportunitiesUtilization of
locally available talent.
Presence of counterfeit
components marketPressure from OEMImport pose price based competitionMarginalization of
small players
STRENTHS WEAKNESS
OPPORTUNITIES THREATS
CHINA AUTO COMPONENT INDUSTRYChina is the worlds largest hub of automotive
part manufacturer.The industry revenue was nearly US $ 15,320
mn in 2009Providing employment to 465,120.The export sales were of about 29,437 US $
mn in 2009.The domestic sales were of about 86,156 US
$ mn in 2009.
Both have rapidly growing market.From 2001-2007
China showed growth rate of 40% India had growth rate of 14%.
China’s auto component sales increased by 42% from $8.7bn to $50.2bn from 2002 to 2007.
While India’s increased by 23% from $3.9bn to $11.3bn.
9% of 5000 Indian auto companies have revenue over $1mn while in China 12% of 12000 have revenue over $1mn.
INDIA
CHINA
Auto Component Sales
US imports from India and China
MEASURES TO SUSTAIN GROWTH COMPARED TO CHINA
SETTING UP OF RND CENTRES. 2. REDUCTION IN TAXES. 3. REDUCTION IN POWERCOST. 4. MANUFACTURERS SHOULD WORK
CLOSELY WITH OEMs. 5. OUTSOURCING & SETTING UP OF
UNITS IN LOW COST MANUFACTURING COUNTRIES
CONCLUSIONIndian auto component industry is one of
the largest growing industries in the world.
Has a huge scope of investment. Favorable destination for foreign
companies to establish their facilities and form alliances with domestic companies.
Referenceshttp://www.ibisworld.com.cn/industry/default.aspx?
indid=913http://www.atkearney.com/index.php/Our-expertise/
automotive-assessment-of-indian-and-chinese-auto-component-landscape.html
http://economictimes.indiatimes.com/news/news-by-industry/auto/auto-components/Share-of-Chinese-auto-parts-in-Indian-mkt-to-reach-685-bn/articleshow/5653656.cms
http://www.ibef.org/industry/autocomponents.aspxhttp://en.wikipedia.org/wiki/
Automobile_industry_in_China#Auto_parts