Auto Component Industry in India: Growing Capabilities & Strengths

Agenda
India: A Vibrant Economy Automotive Industry in India Auto Component Industry in India Policy Environment Capabilities & Challenges Conclusion About ACMA

India: A Vibrant Economy

1. Largest Democracy 1.2 billion people, Growing Middle Class 2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion) 3. One of the fastest growing economies - Estimates for 2011-12: 7%

Indias average GDP growth rate: 8.4% over past 5 years Expected to outpace China in the next decade

4. 3rd Largest Investor base in the World 5. Robust Legal and Banking Infrastructure 6. Demographics Advantage Youth driven economy 7. Suburbanization & Rural to Urban Migration 140 million by 2020; 700 million by 2050 8. 2nd largest pool of Certified Professionals and highest number of Qualified Engineers in the world 9. Investment in Infrastructure
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Infrastructure Development A Special Thrust

Airports Ports

Roads

USD 8 bn Total planned infrastructure investments of $500 billion* from 2007-12

USD 22 bn Telecommunication

USD 79 bn Railways Utilities

USD 65 bn

USD 65 bn

USD 167 bn

Infrastructural spend targeted to double to USD 1 trillion for 2012-17

Source: Planning commission * Also includes Irrigation,

(*) Also irrigation, water supply and sanitation, storage and gas water supply and sanitation, storage & includes gas Source: Planning Commission

Automotive Industry in India

Automotive Clusters in India

Eicher Escorts Hero Moto Corp Honda Motorcycle Honda SIELCars ICML JCB Maruti Suzuki New Holland Mahindra Suzuki Motorcycles Swaraj Mazda Tata Motors Yamaha

North

*New Hub: Sanand Tata Motors, Maruti, Ford India,

Hindustan Motors Tata Motors

East West
Bajaj Auto Fiat Force Motors GM John Deere Mahindra Mahindra Navistar Man Force Mercedes Benz PSA Skoda Tata Hitachi Tata Motors Volkswagen Volvo Eicher Ashok Leyland BMW Caterpillar South Daimler Ford Hindustan Motors Hyundai Nissan Renault Royal Enfield Same Deutz TAFE Tata Motors Toyota Kirloskar TVS Volvo Buses (Illustrative List)

Significant Manufacturing base of OEMs Indian & Global

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Rapidly growing presence of Global OEMs - Passenger Car

2007 2011

(Illustrative List)

Passenger Vehicles Production

(In 000 units)

6,000 5,000 4,000 2,987 3,000 2,000 1,000 2008-09 2009-10 2010-11 2011-12 2015-16 2020-21 1,838 2,357 3,124

CAGR 2008-12: 14%

9,700

CAGR 2012-21: 13%*

5,100

Figures for financial year April to March

(* Estimates)

Source: SIAM 8

Other Vehicles Production

Commercial Vehicles
CAGR 2008-12: 22% CAGR 2012-21: 11%* (In 000 units)
1200 1,000 1000 800 600 400 200 0 2009-10 2010-11 2011-12 2015-16 2020-21 545 420 640 710

Tractors
CAGR 2011-21: 5%*

(In 000 units)

Commercial Vehicles include: Small Commercial Vehicles (SCV) Light Commercial Vehicles (LCV)

< 1 ton > 1 ton but < 7.5 tons

Medium Commercial Vehicles (MCV) Heavy Commercial Vehicles (HCV)

> 7.5 tons but <16 tons > 16 tons

Two & Three Wheelers

CAGR 2008-12: 16% CAGR 2012-21: 7%*

(In 000 units)

200

Construction Vehicles
CAGR 2011-21: 14%*

(In 000 units)

180

100 48 54

40

0 2009-10 2010-11 2011-12 2015-16 2020-21

Source: SIAM Figures for financial year April to March

(* Estimates)

On Road Vehicle Population in India - 2010

72

(million units)

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Source: ACMA AC Nielson Aftermarket Report 10

Auto Component Industry in India

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Auto Component Industry Profile - Turnover

120 100
USD billion

113
CAGR 2007-12: 13% CAGR 2012-21: 11%*

80 60 40 20 0 26.5 23

66.3 43.5

30.1

39.9

2007-08 2008-09 2009-10 2010-11 2011-12 2015-16 2020-21

Comprehensive Product Range

Figures for financial year April to March (* Estimates)

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Auto Component Industry Profile - Exports

30
CAGR 2007-12: 16%
USD billion

29*

20

CAGR 2012-21: 17%*

12.3* 10 3.8 0 2007-08 2008-09 2009-10 2010-11 2011-12 2015-16 2020-21 4 3.4 5.2 6.8

Export Destinations

Figures for financial year April to March (* Estimates)

OEM/Tier 1 account for 80%; Aftermarket for 20%

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Increased Component Outsourcing

Over 30 IPOs of Global OEMs & Tier 1 Procuring from India

OEMs
BMW Caterpillar Ford FIAT GM MAN Mercedes-Benz Nissan Peugeot Renault Toyota Volkswagen

Tier 1 Component Manufacturers

Bosch Continental Cummins DANA Delphi Denso Eaton Getrag Kolbenschmidt Magna Meritor TRW Valeo
(Illustrative List)

Indian components already driving on your roads

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Auto Component Industry Profile - Imports

40 30
USD billion

35 *
CAGR 2007-11: 11% CAGR 2011-21: 15.2%*

20 10 0 6.2 6.8 6.5 8.5 10.6

17.5 *

2007-08 2008-09 2009-10 2010-11 2011-12 2015-16 2020-21

Figures for financial year April to March (* Estimates)

Sources of Imports

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Auto Component Industry Profile - Aftermarket

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12

CAGR 2007-12: 15% CAGR 2012-21: 8.5%*

12.7 *

USD billion

9 5.4 6 3.5 3 3.9 4.3 6.1

8.4*

0 2007-08 2008-09 2009-10 2010-11 2011-12 2015-16 2020-21 (* Estimates)

Source: ACMA, Ernst & Young

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Policy Environment & Trade

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Favorable Policy Regime

Auto Policy 2002 and Auto Mission Plan 2006-16 framework for Automotive Manufacturing in India

Manufacturing and Imports Free from Licensing and Approvals WTO compliant policies (no import restrictions and reduced tariff levels) Robust Legal system and stable Foreign Exchange regime Joined UN-ECE WP 29 for Global Standard in Technology Increased budgets for R&D activities Robust Indian Automotive Industry

100% FDI permitted without prior Govt. approval

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Capabilities & Challenges of Indian Component Suppliers

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Indian Suppliers Focus Global Best Practices

Focus on Quality Industry fast embracing modern shop-floor practices:
5-S; 7-W Kaizen TQM TPM 6 Sigma Lean Manufacturing

Deming Award - 12

Japan Quality Medal - 2

TPM Award - 15

Shingo Silver Medallion - 1

JIPM - 3

Largest no. of Deming Award winning companies outside Japan

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Increasing focus on Innovation and Research

Design & Research Centers of leading Global companies in India
AMD Boeing Bosch Caterpillar Continental Cummins Ford GM GE Honda Honeywell Hyundai Intel Magna Motorola Mercedes Benz Microsoft Renault Nissan Suzuki Valeo
(Illustrative List)
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Challenges Typical of a high Growth Emerging Market

Raising Capital & Scaling Capacities Infrastructure Challenges
Roads Ports Power

Inflation Availability of Skilled Manpower Managerial Depth across Tiers R&D Competence

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Conclusion
Vibrant Indian Economy Automotive Industry - Double Digit Growth in all segments India fast emerging as hub for Global Vehicle Programs 2020: USD 113 billion Auto Component Industry Growing Engineering and IT capability for Designing & Manufacturing Respect for IPR Opportunity to Partner in Product & Process Innovation New Opportunity to address OEMs, T1s and Aftermarket India: The Gateway of Growth
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About ACMA

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About ACMA
Established in 1959 Apex body of Auto Component Industry in India 650+ members from the Organized sector Represents 85% of the Industry by turnover Represented on all Government and Industry bodies Strategic to the Auto Sector Offices across all Regions in the Country An ISO 9001-2008 Institution
ACMA Excellence in Service Delivery
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ACMA Services

Promotes Indian Automotive Component Industry

Trade Promotion

Technology Up-gradation

Quality Enhancement

Collection & Dissemination of Information

Vital Catalyst for Industrial Development

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Thank You

for any assistance contact

ACMA The Capital Court, 6th Floor, Olof Palme Marg, Munirka, New Delhi 110 067 Tel: 011-26160315, Fax: 011-26160317 E-mail: acma@acma.in, Website: www.acma.in

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