AUTO COMPONENT

INDUSTRY
Presented By Group 7:

Vivek Kapoor (45)

Samrat (30)
Allen Sangeeth
Ankit Jain
Niraj Singh
Sudhanshu
Contents:
HISTORICAL ASPECT
CURRENT SCENARIO
GLOBAL SCENARIO
 Major Acquistions
GROWTH POTENTIAL
GOVERNMENT INITIATIVES
FDI
Major Players
Industry Statistics
SWOT
CHINA and INDIA
CONCLUSION
 HISTORICAL ASPECT…
Initially, the Indian Auto Component Industry was
not competitive enough for the global market due to
its:-
Inferior quality
Lower labour productivity
High cost of raw materials
Protectionist policies of Indian government
Limited demand from vehicle manufacturers

However, a change came after the liberalization of

the India economy in 1991 with:
Abolition of licensing
Approval given to up to 51% foreign investment
 CURRENT SCENARIO
Indian 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 Germany US $ 35 mn

Peddinghaus
EL Forge Shakespeare UK US $ 28 mn
Forging
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 INVESTMENT
The 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 Fasteners
 Brakes India
International 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
Product Range

9%
7% 31% Engine Parts
Drive Transmission &
10% Driving Parts
Body & Chassis
Suspension & Braking
Parts
Equipments
12% Electrical Parts
12% 19% 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
Export Markets
1% 4%

Europe
24% N. America
40% Africa
Asia
Australia
S.America
8%

23%
Auto Components Industry Imports
(In US $
Billion)
Capacity Addition (In US $ Billion)
 (In US $
Auto Component Industry Performance Billion)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Turnover 8.7 12 15 18 18.40 22

Growth 29% 38% 25% 20% 2% 20%
Rate(%)
Export 1.69 2.47 2.67 3.52 3.80 3.80
Growth 34% 46% 8% 32% 8% -
Rate(%)
Import 1.90 2.48 3.60 5.22 6.80 8.16
Growth 33% 30% 45% 45% 30% 20%
Rate(%)
Investment 3.75 4.40 5.40 7.20 7.30 9.00
STRENTHS WEAKNESS

Cost competitive Low level of R and

Quality D capabilities
Access to latest Dependence on
technology foreign majors for
Supporting technology
infrastructure and Exposure to cyclical
metal industry downturns
OPPORTUNITIES THREATS

May serve as a Presence of counterfeit

sourcing hub components market
Export Pressure from OEM
Opportunities Import pose price
Utilization of based competition
locally available Marginalization of
talent. small players
 CHINA AUTO COMPONENT INDUSTRY
China is the worlds largest hub of automotive part
manufacturer.
The industry revenue was nearly US $ 15,320 mn in
2009
Providing 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.
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
 CONCLUSION
Indian 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.
 References
http://www.ibisworld.com.cn/industry/default.aspx?indid=913
http://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.aspx
http://en.wikipedia.org/wiki/Automobile_industry_in_China#
Auto_parts