INDUSTRY PROFILE

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. The company soon branched out into the manufacture
of light commercial vehicles (LCVs) and agricultural tractors.

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 nationalization
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.

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 liberalization 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.

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. In February 2009, monthly
sales of passenger cars in India exceeded 100,000 units and has since grown rapidly to a record
monthly high of 182,992 units in October 2009. 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) this progression is unlikely to stop
in the coming decade. Congestion of Indian roads, more than market demand, will likely be the
limiting factor.

SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and
international, in India
The Automotive industry in India is one of the largest in the world and one of the fastest growing
globally. India manufactures over 17.5 million vehicles (including 2 wheeled and 4 wheeled) and
exports about 2.33 million every year. It is the world's second largest manufacturer of
motorcycles, with annual sales exceeding 8.5 million in 2009. 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. 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. In 2009, India emerged as
Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.

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. 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. By 2050, the country is expected to top the world in car volumes
with approximately 611 million vehicles on the nation's roads.

A chunk of India's car manufacturing industry is based in and around Chennai, also known as the
"Detroit of India"with the India operations of BMW, Ford, Hyundai and Nissan headquartered in
the city. Chennai accounts for 60 per cent of the country's automotive exports. Gurgaon and
Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured. 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, Fiat and Force Motors having assembly plants in the area. Ahmedabad with the Tata Nano
plant, Halol with General Motors, Aurangabad with Audi, Kolkatta with Hindustan Motors,
Noida with Honda and Bengaluru with Toyota are some of the other automotive manufacturing
regions around the country

During the 1920s, cars exhibited design refinements such as balloon tires, pressed-steel
wheels, and four-wheel brakes.
The origin of automobile is not certain. In this section of
automobile history, we will only discuss about the phases of
automobile in the development and modernization process since
the first car was shipped to India. We will start automotive history
from this point of time.

The automobile industry has changed the way people live and
work. The earliest of modern cars was manufactured in the year
1895. Shortly the first appearance of the car followed in India. As
the century truned, three cars were imported in Mumbai (India). Within decade there were total
of 1025 cars in the city.

The dawn of automobile actually goes back to 4000 years when the first wheel was used for
transportation in India. In the begining of 15th century Portuguese arrived in China and the
interaction of the two cultures led to a variety of new technologies, including the creation of a
wheel that turned under its own power. By 1600s small steam-
powered engine models was developed, but it took another
century before a full-sized engine-powered vehicle was created.

The actual horseless carriage was introduced in the year 1893 by

brothers Charles and Frank Duryea. It was the first internal-
combustion motor car of America, and it was followed by Henry
Ford's first experimental car that same year.

One of the highest-rated early luxury automobiles was the 1909 Rolls-Royce Silver Ghost that
featured a quiet 6-cylinder engine, leather interior, folding windscreens and hood, and an
aluminum body. It was usually driven by chauffeurs and emphasis was on comfort and style
rather than speed.

Automobile Industry in India

Automobile Industry in India has witnessed a tremendous growth in recent years and is all set to
carry on the momentum in the foreseeable future. Indian automobile industry has come a long
way since the first car ran on the streets of Bombay in 1898. Today, automobile sector in India is
one of the key sectors of the economy in terms of the employment. Directly and indirectly it
employs more than 10 million people and if we add the number of people employed in the auto-
component and auto ancillary industry then the number goes even higher.

The automobile industry comprises of heavy vehicles (trucks, buses, tempos, tractors); passenger
cars; and two-wheelers. Heavy vehicles section is dominated by Tata-Telco, Ashok Leyland,
Eicher Motors, Mahindra and Mahindra, and Bajaj. The major car manufacturers in India are
Hindustan Motors, Maruti Udyog, Fiat India Private Ltd., Ford India Ltd., General Motors India
Pvt. Ltd., Honda Siel Cars India Ltd., Hyundai Motors India Ltd., and Skoda India Private Ltd.,
Toyota Motors, Tata Motors etc. The dominant players in the two-wheeler sector are Hero
Honda, Bajaj, TVS, Honda Motorcycle & Scooter India (Pvt.) Ltd., Yamaha etc.

In the initial years after independence Indian automobile industry was plagued by unfavourable
government policies. All it had to offer in the passenger car segment was a 1940s Morris model
called the Ambassador and a 1960s Suzuki-derived model called the Maruti 800. The automobile
sector in India underwent a
metamorphosis as a result of the
liberalization policies initiated in the 1991. Measures such as relaxation of the foreign exchange
and equity regulations, reduction of tariffs on imports, and refining the banking policies played a
vital role in turning around the Indian automobile industry. Until the mid 1990s, the Indian auto
sector consisted of just a handful of local companies. However, after the sector opened to foreign
direct investment in 1996, global majors moved in. Automobile industry in India also received an
unintended boost from stringent government auto emission regulations over the past few years.
This ensured that vehicles produced in India conformed to the standards of the developed world.

Indian automobile industry has matured in last few years and offers differentiated products for
different segments of the society. It is currently making inroads into the rural middle class
market after its inroads into the urban markets and rural rich. In the recent years Indian
automobile sector has witnessed a slew of investments. India is on every major global
automobile player's radar. Indian automobile industry is also fast becoming an outsourcing hub
for automobile companies worldwide, as indicated by the zooming automobile exports from the
country. Today, Hyundai, Honda, Toyota, GM, Ford and Mitsubishi have set up their
manufacturing bases in India. Due to rapid economic growth and higher disposable income it is
believed that the success story of the Indian automobile industry is not going to end soon.

Some of the major characteristics of Indian automobile sector are:

• Second largest two-wheeler market in the world.

• Fourth largest commercial vehicle market in the world.
• 11th largest passenger car market in the world
• Expected to become the world's third largest automobile market by 2030, behind only
China and the US.