chapter-2 over view of indian automobile...
TRANSCRIPT
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Chapter-2
OVER VIEW OF INDIAN AUTOMOBILE SECTOR
2.1 INTRODUCTION
It is a well accepted fact that the automotive industry is a volume driven industry and
a certain critical mass is a pre-requisite for attracting the much needed investment in
Research and Development, New Product Design & Development, and in R&D
investment is also needed for innovations which is the life line for achieving and
retaining the competitiveness in this industry. This competitiveness in turn depends
on the capacity and the speed of the industry to innovate and upgrade. No nation on
its own can make its industries competitive but it is the companies which make the
industry competitive. The most important indices of competitiveness are the
productivity both of labor and capital.
The concept of attaining competitiveness on the basis of cheap and abundant labor,
favorable exchange rates, low interest rates and concessional duty structure is
becoming outdated and not sustainable. In the light of above, it is felt that a greater
emphasis is required on the development of the factors which can ensure
competitiveness on a long term basis.
The automotive sector with its deep backward (metals- steel, aluminum, copper etc.
plastics, paint, glass, electronics, capital equipments, trucking warehousing and
logistics) and forward (dealership retails , credit and financing, logistics, advertising,
repair and maintenance, petroleum products, gas stations, insurance, service parts)
linkages has been recognized and identified at different forums ( Development
Council of Automobile and Allied Industries, Planning Commission, National
Manufacturing Competitiveness Council and Investment Commission) as a sector
with a very high potential to increase the share of manufacturing in GDP , exports and
employment. The sector is also seen as a multiplier of industrial growth. It helps in
attaining two critical goals of the Government, that of increasing manufacturing
output and of providing employment. Although indirectly but it also facilitates the
54
third objective of increasing agricultural productivity through farm mechanization
and the needs of agricultural produce transportation.
The country with its rapidly growing middle class (450 million in 2007, NCAER
Report), market oriented stable economy, availability of trained manpower at
competitive cost, fairly well developed credit and financing facilities and local
availability of almost all the raw materials at a competitive cost has offered itself as
one of the favorite destination for investment to the auto makers. These advantages
need to be exploited in a manner to attain the twin objective of ensuring availability
of best quality product at lowest cost to the consumers on the one hand and
developing and assimilating the latest technology in the industry on the other hand.
It is also important that a general improvement in availability of trained manpower
and good infrastructure is required for the sustainable growth of the industry. But
these generalized efforts in development of the factors of production rarely produce
competitive advantage. Only an advanced, specialized and industry specific initiatives
can lead to competitive advantage. Keeping in view the above factors, the
Government of India has launched a unique initiative of NATRIP to provide a
specialized facility for Testing, Certification and Homologation to the industry.
A similar initiative is required for creating a specialized institution in automotive
sector for education, training and development, market analysis and formulation and
dissemination of courses in automotive sector through ITIs and ATIs .
It has been noticed that the Auto Industry has grown in clusters of inter-connected
companies which are linked by commonalities and complementarities. The major
clusters are in and around Manesar in North, Pune in West, Chennai in South,
Jamshedpur-Kolkata in East and Indore in Central India.
The Indian Government is envisaged in the Eleventh Five Year Plan period to create a
National Level Specialized Education and Training Institute for Automotive Sector
and to enhance the transportation, communication and export infrastructure facilities
through concerned Ministries in and around these clusters. The Government will
make attempts to eliminate all the barriers to local competition and organize the
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relevant Government Department and Educational and Research Institution in and
around the clusters.
2.2 The Present Status of Automotive Industry-
The Indian Automotive Industry comprising of the automobile and the auto
component sectors has recorded considerable growth following the de-licensing and
opening up of the sector to FDI in 1993. The unbundling of this industry from
restrictive environment has, on the one hand, helped in restructuring, absorbing new
technologies align it to the global developments and realize its potential with
significant increase in industry’s contribution to overall industrial growth in the
country. The investment in the industry of nearly Rs. 50,000 Crore in 2004-05 is
slated to go up to Rs. 85,000 Crore by 2007-08.
Automotive Industry, globally, as well in India, is one of the key sectors of the
economy. Due to its deep forward and backward linkages with several key segments
of the economy, automotive industry has a strong multiplier effect and acts as one of
the drivers of economic growth.
The well-developed Indian automotive industry produces a wide variety of vehicles:
passenger cars, light, medium and heavy commercial vehicles, multi-utility vehicles
such as jeeps, scooters, motor-cycles, mopeds, three wheelers, tractors and other
agricultural equipments etc. The sector has tremendous potential of providing
employment which will increase the present figure of employment in manufacturing
sector which is quite low at 12% as compared to the countries like Malaysia (50%);
Korea (62%) and China (31%).
2.2.1 Installed capacity -
The automobile industry especially over a period of time and particularly after
liberalization, has installed a robust capacity. The installed capacity in different
segments of automobile industry is as under:
56
Table 2.1 Installed Capacities in Different Segments (in nos.)
S. No. Segment Installed Capacity
1 . Four Wheelers 1,590,000
2 Two & Three Wheelers 7,950,000
Grand Total 9,540,000
Source- SIAM
2.2.2 Production Trend -
The production of all categories of vehicles has grown at a rate of 16% per annum
over the last five years. The last 5 years achievements are given below:
Table 2.2 Productions of all categories of vehicles
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Car 564052 608851 842437 960505 1045881
Multi Utility Vehicles 105667 114479 146103 249149 263032
Commercial Vehicles 162508 203697 275224 350033 391078
Two Wheelers 4271327 5076221 5624950 6526547 7600801
Three Wheelers 212748 276719 340729 374414 434424
Total 5316302 6279967 7229443 8460648 9735216
Percentage (%) 11.70% 18.60% 15.12% 16.80% 15.06%
Source: SIAM
2.2.3 Export of Vehicles-
Automotive industry of India is now finding increasing recognition worldwide. While
a beginning has been made in exports of vehicles, the potential in this area still
remains to be fully tapped. Significantly, during the last two years the export in this
sector has grown specifically in export of cars and two / three wheelers. The table
below indicates the export performance during last six years.
57
Table 2.3 Export of Different types of automobiles from India
Category 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Car 22990 50088 70828 126249 160677 170193
Multi Utility Vehicles 4122 3077 1177 3067 5736 5579
Commercial Vehicles 13770 11870 12255 17227 29949 40581
Two Wheelers 111138 104183 179682 264669 366724 513256
Three Wheelers 16263 15462 43366 68138 66801 76885
Total 168283 184680 307308 479350 629887 806494
Growth Percentage (%) 9.74 66.4 55.98 31.4 28.03
Source: SIAM
The automobile exports crossed US $ 1 billion mark in 2003-04 and reached US $
2.28 billion in 2005-06.
2.2.4 Manufacturers of automobiles in India-
Automobile manufacturing industry is highly capital intensive and need very
expensive technology, however the growth in Indian automobile market has not only
encouraged the Indian organizations but also attracted many automobile
manufacturers to set up their manufacturing facilities here.
To maximize the efficient use of the resources most of these manufacturers are using
these facilities to manufacture multiple type of the automobiles.
A glimpse of different types of vehicles being manufactured by different
manufacturers in India can be had in the following table---
58
Table 2.4 Manufacturers of automobiles in India
Passengers Vehicles (PVS) Maruti Udyog
Hyundai Motors India Ltd.
Tata Motors
Honda Siel cars India Ltd.
Ford India Pvt. Ltd
Mahindra and Mahindra Ltd.
Mercedes
Skoda
Volkswagen
Fiat
BMW
Nisan
General Motors
Hindustan Motors
Utility Vehicles Maruti Udyog Ltd.
Mahindra and Mahindra Ltd.
Toyota Kirloskar MotorPvt Ltd.
Tata Motors Ltd
General Motors India Pvt Ltd.
Hyundai Motor India Ltd.
Mahindra & Mahindra Ltd
Multi-Purpose Vehicles Maruti Udyog Ltd.
Mahindra & Mahindra Ltd
Medium and Heavy
Commercial Vehicles
Tata Motors
Ashok Leyland
Eicher Motors
Swaraj Mazda
59
Passenger Carriers Tata Motors
Mahindra and Mahindra
Swaraj Mazda
Eicher Motors
Volvo
Mercedes
Goods Carriers Tata Motors
Mahindra and Mahindra
Swaraj Mazda
Eicher Motors
Volvo
Mercedes
Source- computed through various journals, magazines etc.
2.3 Car manufacturing Industry-
Since this study is for the small car, the detail of the car industry in India is of
significance importance for the study. Some of the relevant information available on
various publications are given below-
2.3.1 Current Status-
The Indian automobile industry is the tenth largest in the world with an annual
production of approximately 2 million units. Indian auto industry, promises to
become the major automotive industry in the upcoming years and the industry experts
are hopeful that it will touch 10 million units mark.Indian automobile industry is
involved in design, development, manufacture, marketing, and sale of motor vehicles.
There are a number of global automotive giants that are upbeat about the expansion
plans and collaboration with domestic companies to produce automobiles in India.
The major car manufacturers in India are Maruti Udyog, Hyundai Motors India Ltd.,
General Motors India Pvt. Ltd., Honda Cars India Ltd., Toyota Kirloskar Motor Ltd.,
Hindustan Motors etc.
60
The two-wheeler manufacturers in India are Honda Motorcycle & Scooter India (Pvt.)
Ltd., TVS, Hero Honda, Yamaha, Bajaj, Mahindra and Mahindra, Force motor India
etc.
The heavy motors including buses, trucks, auto rickshaws and multi-utility vehicles
are manufactured by Tata-motors, Eicher Motors, Bajaj, Mahindra and Mahindra,
Volvo, Mercedes etc.
The Indian automotive industry is the 2nd fastest growing in the world. About 8
million vehicles are produced annually in this country toady. During 2005-2006,
India has emerged as the 3 rd largest market in the Asia Pacific Region.
With various car manufacturing companies setting up their units in different parts of
the country, the production of the cars will increase at a very fast rate. The car
statistics indicate that India will soon become one of the top 10 car manufacturing
countries , leaving behind the U.K. Car statistics also show that by the end of the
fiscal year 2006-2007, the car production capacity in India will exceed the mark of 2
million. Thus, the production of cars will increase by 70% from the present capacity
of 1.2 million.
2.3.2 Total Sale of cars -
A graphical representation of the total sale trend of passenger cars (including the
domestic sale and exports) is made below:
Fig: 2.1 Trend of Passenger Car Sale, Source- SIAM
2.3.2.1 Domestic Sale of Cars
The domestic sales of passenger cars have increased significantly over the years. A
graphical representation of the domestic sale of cars will give you an insight about the
present market situation prevailing in the country
Fig. 2.2 Domestic sale of car in India,
In the recent years, India has emerged as one of the major bases for manufacturing
small passenger cars. At In the recent years, India
bases for manufacturing small passenger cars. At present the Indian automotive
industry boasts of being the 3 rd largest manufacturer of small cars . According to the
car statistics almost 70 % of the cars sold in this coun
small cars. A number of car manufacturers like: Maruti Udyog,
Hyundai, Honda, Ford, Hindustan Motors
model of cars.. It is expected that the various automobile manufacturers will be
investing about $ 5 billion in India, during t
0
200000
400000
600000
800000
1000000
1200000
1400000
675000
2.3.2.1 Domestic Sale of Cars -
The domestic sales of passenger cars have increased significantly over the years. A
graphical representation of the domestic sale of cars will give you an insight about the
present market situation prevailing in the country:
.
Fig. 2.2 Domestic sale of car in India, Source- SIAM
In the recent years, India has emerged as one of the major bases for manufacturing
small passenger cars. At In the recent years, India has emerged as one of the major
bases for manufacturing small passenger cars. At present the Indian automotive
industry boasts of being the 3 rd largest manufacturer of small cars . According to the
car statistics almost 70 % of the cars sold in this country come under the segment of
small cars. A number of car manufacturers like: Maruti Udyog, Tata Motors
Hindustan Motors, Fiat, General Motors etc offer various new
model of cars.. It is expected that the various automobile manufacturers will be
investing about $ 5 billion in India, during the period2005-2010.
700000
9000001020000
1150000
1375000
Domestic Sale of Cars
Unit Sold
61
The domestic sales of passenger cars have increased significantly over the years. A
graphical representation of the domestic sale of cars will give you an insight about the
In the recent years, India has emerged as one of the major bases for manufacturing
has emerged as one of the major
bases for manufacturing small passenger cars. At present the Indian automotive
industry boasts of being the 3 rd largest manufacturer of small cars . According to the
try come under the segment of
Tata Motors,
etc offer various new
model of cars.. It is expected that the various automobile manufacturers will be
Unit Sold
62
2.3.2.2 Exports of Cars -
As per the reports, export of passenger cars from India has also grown considerably
over the last decade. A graphical representation of car export trend will help you to
make an in-depth analysis of the present status of the Indian automotive industry:
www.automobileindia.com
Fig 2.3 Export of cars from India, Source- SIAM
With new strategies being implemented and more investments being made in Indian
automotive industry the production as well as the domestic sale and exports will
increase substantially.
2.4 Multi Utility Vehicles in India
Automobile companies like Maruti, Mahindra & Mahindra and Tata Motors have
come up with some of the highest performance delivering multi utility vehicles or
MUVs. These MUVs are designed specially keeping in view the Indian conditions
and are laden with a number of advanced technical specifications. Multi utility
vehicle statistics suggest that the production of these vehicles will increase at a fast
pace in the forthcoming years. Production trend of multi utility vehicles in India from
50200
74750
125250
165000175000
200000
0
50000
100000
150000
200000
250000
Car Export Trend
Unit Sold
63
2001 to 2007: Due to their fuel efficiency and multi usage potentialities, the MUVs
have become much popular in India. Over the years, the demand of multi utility
vehicles has also increased. The MUVs produced nowadays are even having excellent
features. The MUVs come with a cluster of numerous comfort features that ensure
smooth driving experience to the users. Although the other segments of car have
recorded production growth at a higher rate but the manufacture of MUVs have
grown slowly. In the last decade, the domestic sale of these vehicles has seen many
ups and downs. Multi utility vehicle statistics indicate that the domestic sale of these
vehicles will however grow in the following years.
2.4.1 Domestic sales trend of multi utility vehicles
Domestic sales trend of multi utility vehicles in India from 2001 to 2007 has been
depicted with the help of following bar diagram,
Fig 2.4 Domestic sale trend of MUV’s in India, Source- SIAM
From the perusal of above data it quite evident that domestic sale of multi utilility
vehicle was 60755 in 2001-2002, which incresed to 83091 vehicles in 2006-2007 ,
thus it has registered a growth of about 40 percent during this period.
6075552987
5965565033 66385
83091
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
Domestic Sales Trend of MUVs
Unit Exported
64
2.4.2 Export Trend of MUVs from India
Export of multi-utility vehicles has also increased during the corresponding period.
India exported 815 MUVs in the year 2001-2002, which increased to 1290 vehicles in
the year 2006-2007, thus registered an impressive growth of about 60 percent during
this period.
Figures relating to export trend of MUVs have been presented through the help of
following bar diagram as drawn in Fig. 2.5 --
Fig 2.5 Export Trend of MUV’s from India Source- SIAM
2.5 Growth in automobile Production
Details of production of different types of automobiles manufactured by the Indian
manufacturing units, is tabulated below are indicative of the growth registered by
each sagment of automobiles (the data do not inclueds two wheelers)
815
515
922
1227
1002
1290
0
200
400
600
800
1000
1200
1400
Export Trend of MUVs
Unit Exported
65
Table. 2.5 The production of vehicles by various manufactures in the year
2004-05 & 2005-06
Passengers Vehicles (PVS) From
April-
November
04-05
From
April-
November
05-06
Total
Market
Share
(in %)
The Net
Change
between
the
period
(in %)
Total
number
of
exports
in April
05-06
Maruti Udyog 2,69360 2,91,182 52.2 8.1 23,043
Hyundai Motors India Ltd. 89,075 1,07, 066 19.2 20.2 68,374
Tata Motors 95,402 24,348 16.6 -2.7 12,105
Honda Cars India Ltd. 23,186 24,348 4.4 5.1 31
Ford India Pvt. Ltd 15,026 10,512 1.9 -30% 9,928
Utility Vehicles
Mahindra and Mahindra Ltd. 49,897 51,540 42.7 3.3 1,878
Toyota Kirloskar MotorPvt Ltd. 24,404 24,983 20.7 2.4 0
Tata Motors Ltd 19,967 21,610 17.9 8.2 905
General Motors India Pvt Ltd. 7,008 12,027 10 71.6 0
Maruti Udyog Ltd . 2682 2472 2 -7.8 54
Hyundai Motor India Ltd. 255 1,042 0.9 308.2 0
Multi-Purpose Vehicles
Maruti Udyog Ltd. 42,388 43,858 100 3.5 731
Mahindra & Mahindra Ltd 13 0 0 0 0
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Medium and Heavy
Commercial Vehicles
Tata Motors 79,614 73,538 61.1 -7.6 4,807
Ashok Leyland 27,577 33,406 27.7 21.1 2825
Eicher Motors 8,043 8,700 7.2 8.2 318
Swaraj Mazda 3,573 4,080 3.4 14.2 115
Light Commercial Vehicles
and passenger careers
Tata Motors 5,835 6,811 46.8 16.7 1,096
Mahindra and Mahindra 2,305 1,960 13.5 -15 115
Swaraj Mazda 1,178 1,315 9 11.6 12
Force motors Ltd. 2,059 2,877 19.8 39.7 59
Goods Carriers
Tata Motors 30,955 44,380 58.9 43.4 12,461
Mahindra and Mahindra 23,563 23,731 31.5 0.7 1,600
Swaraj Mazda 2,671 2,299 3 -13.9 204
Eicher Motors 3,019 2,954 3.9 -2.1 451
Source- SIAM
2.6 Hatchback in India -
Small cars falls in the category of Hatchbacks and therefore information about the
different Hatchbacks available on Indian roads, the price, seating capacity ,fuel and
capacity of engine, the running fuel efficiency are of interest. Currently to meet the
increased demand and preferences all manufacturers have developed different models
of Hatchback having multiple variants. The table below gives the details of various
Hatchbacks available in Indian market. Many of these models are having many
variants with different facilities to meet the preferences of customers.
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Table 2.6 Models of Hatchback on Road in India – 2011
Models Ex. Showroom Price Description
Tata Motors Nano Rs.1.51 to 2.10 lakh Hatchback, 4 Seater
Fuel Type: Petrol
Mileage: 18.3(Tested)
Engine: 624 CC
Maruti Suzuki Alto Rs. 2.49 to 3.49 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 13.85
Engine: 796 CC
Hyundai New EON Rs.2.80 to 3.84 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 21.1 (Claimed)
Engine: 814 CC
Chevrolet Spark Rs. 3.33 to 4.18 lakh Hatchback, 5 Seater
Fuel Type: Petrol_Lpg
Mileage: 16.5
Engine: 995 CC
Maruti Suzuki Estilo Rs. 3.42 to 4.36 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 13.55
Engine: 998 CC
Tata Motors Indica eV2 Rs. 3.42 to 5.04 lakh Hatchback, Seater
Mileage: 25
Engine: 1396 CC
Maruti Suzuki Wagon R Rs. 3.52 to 4.43 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 15.3(Tested)
Engine: 998 CC
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Hyundai i10 Rs. 3.72 to 6.24 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: NA
Engine: 1086 CC
Maruti Suzuki A Star Rs. 3.80 to 4.63 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 13.79(Tested)
Engine: 998 CC
Ford Figo Rs. 3.91 to 6.08 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 11.25(Tested)
Engine: 1196 CC
Chevrolet Beat Rs. 3.94 to 6.00 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 13.5(Tested)
Engine: 1199 CC
Honda Brio
Rs. 4.17 to 5.40 lakh
Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 18.4 ( Claimed)
Engine: 1198 CC
Maruti Suzuki Ritz Rs. 4.27 to 6.36 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 17.7
Engine: 1197 CC
Nissan Micra Rs. 4.33 to 6.58 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 9.1(Tested)
Engine: 1198 CC
Maruti Suzuki New Swift Rs. 4.53 to 6.85 lakh Hatchback, 5 Seater
Fuel Type: Diesel
Mileage: 22.9 (Claimed)
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Engine: 1248 CC
Toyota Liva Rs. 4.68 to 6.44 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 14.55(Tested)
Engine: 1197 CC
Volkswagen Polo Rs. 4.68 to 7.38 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 8.9(Tested)
Engine: 1198 CC
Fiat Grande Punto Rs. 4.91 to 7.50 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 15.2(Claimed)
Engine: 1172 CC
Skoda Fabia Rs. 4.98 to 7.45 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 16.4(Claimed)
Engine: 1198 CC
Honda Jazz Rs. 6.03 to 6.53 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 12.25(Tested)
Engine: 1198 CC
Skoda Fabia Scout Rs. 6.84 to 8.15 lakh Hatchback, 5 Seater
Fuel Type: Petrol
Mileage: 16.5
Engine: 1198 CC
Source- Computed from information available in Autocar and other auto related
magazines.
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2.7 Small Car Models in India Market –
Since the current study is related to the small cars in particular, information about the
small cars in India was gathered. The following table gives the details of the ever
growing list of the popular Small car modules available in Indian market as on Sept.
2011.
Table 2.7 Details of the Popular Small Car Models in India- (Sept.2011)
Sr. No Manufacturer Model On Road
Showroom Price
( Rs.In Laces)
Fuel Engine
Size in
CC
Length
( In
mm)
Mumbai Delhi
1. Chevrolet Beat (1.2 PS) 4.26 3.93 Petrol 1199 3640
Beat (1.0 LT
Option)
6.42 5.94 Diesel 936 3640
Spark (1.0) 3.86 3.54 Petrol 995 3495
U-VA (1.2) 4.90 4.46 Petrol 1150 3880
2. FIAT Grande Punto
(1.2 Fire Active)
5.08 4.80 Petrol 1172 3987
Grande Punto
(1.4 Fire
Emotion)
6.37 6.00 Petrol 1368 3987
Grande Punto
(1.3 Multi Jet
Emotion)
6.94 6.54 Diesel 1248 3987
3. FORD Figo (1.2 LXI
Duratec)
4.10 4.04 Petrol 1196 3795
Figo (1.4 LXI ) 5.46 5.02 Diesel 1399 3795
4. HONDA Jazz 6.50 6.20 Petrol 1198 3900
5. HYUNDAI i10 (1.1 D-Lite) 4.15 3.91 Petrol 1086 3565
i10 1.2 Asta (O) 6.98 6.50 Petrol 1197 3565
71
A/T
i20 (1.2 Era) 5.33 5.06 Petrol 1197 3940
i20 (1.4 CRDi
Magna)
7.21 7.02 Diesel 1396 3940
Santro Xing GL
(Non AC)
3.25 3.11 Petrol 1086 3565
6. Mahindra
Reva Electric
Reva (standard) 3.95 3.56 Electric
al
AC Elc. 2638
7. Maruti
Udyog Ltd
Alto (LX) 3.14 2.93 Petrol 796 3495-
3620
Alto K10 (LXi) 3.60 3.36 Petrol 998 3495-
3620
A-Star (ZXI) 4.94 4.66 Petrol 998 3500
Omni (MPI – 8
Seater)
2.79 2.56 Petrol 796 3370
Estilo (LX) 3.80 3.61 Petrol 998 3600
WagonR (VXi) 4.55 4.28 Petrol 998 3595
Ritz (LDi) 5.58 5.40 Petrol 1248 3715
Ritz (VXi) 5.07 4.82 Petrol 1197 3715
Swift (LXi) 5.35 4.65 Petrol 1197 3850
Swift (LDi) 6.34 5.66 Diesel 1248 3850
EECO
(Std 5 – Seater)
3.29 3.14 Petrol 1196 3675
EECO (AC 5 –
Seater CNG)
4.51 4.10 CNG 1196 3675
8. Nissan MICRA (XE) 4.88 4.53 Petrol 1198 3780
MICRA (XV)
Diesel
6.75 6.27 Diesel 1461 3780
9. Skoda Fabia (1.2 MPi 5.45 5.13 Petrol 1198 4000
72
Active Plus)
Fabia (1.6 MPi
Eligance)
7.22 7.00 Petrol 1598 4000
Fabia (1.2 TDi
Active Plus)
6.67 6.30 Diesel 1199 4000
10. Tata Motors Nano (Std) 1.73 1.56 Petrol 624 3099
Indica
(eV2 Xeta GL)
3.49 3.43 Petrol 1193 3690
Indica
(eV2 L)
4.64 4.53 Diesel 1396 3690
Vista
(Safire 65 GLS)
4.47 4.30 Petrol 1172 3795
Vista (Safire 90
GLX)
5.91 5.65 Petrol 1368 3795
Vista (Quadrajet
ZX)
7.00 6.82 Diesel 1248 3795
Indigo eCS (LS
DICOR)
6.08 5.92 Diesel 1396 3988
Indigo eCS
(GLS)
5.12 5.05 Petrol 1193 3988
11. TOYOTA Etios Liva (J) 4.94 4.42 Petrol 1197 3775
Etios Liva (GD) 6.49 6.18 Diesel 1364 3775
12. Volkswagen Polo (1.2
Trendline
Petrol)
5.26 5.08 Petrol 1198 3970
Polo (1.6
Highline Petrol)
7.35 7.36 Petrol 1598 3970
Polo (1.2
Trendline
Diesel)
8.08 7.97 Diesel 1199 3970
Source – AUTOCAR India (October 2011)
73
2.8 New Car Models for Consumers in Indian, in 2012 -
It is interesting to note that though Small Car market is growing it is having
competition from the other segments of personal vehicles as well, both on price as
well as technical competency, as the automobile companies in India are in the process
of introducing the following new models in the near future-
Table 2.8 New cars for India consumers in 2012 – Updated
Sr.
No
Manufacturer &
Model
Engine
Size
Power/Torque Kerb
Weight
Dimensions
(L/W/H)
Price
(In
Rs.)
Expe
cted
time
1 Audi S6/S7/S8 4-litre
twin-
turbo
V8.
414bhp/
56.13kgm
1895kg
4931/1874/NA mm 85
lakh
Mid
2012
2 Ashok Leyland
Stile
1.5-litre
diesel
105bhp/24.4kg
m
1269kg
4400/1695/1860
mm
7.5-9.5
lakh
Early
2013
3 Chevrolet Enjoy
(MPV)
1.4-litre
petrol
102bhp/13.35k
gm
1205kg 4305/1680/1750
mm
6
lakh
July
2012
4 Chevrolet Sail
Saloon
1.4-litre
petrol
102bhp/13.35k
gm
1070kg 4249/1690/1505
mm
6-7.5
lakh
Sept
2012
5 Chevrolet Sail
Hatchback
1.2-litre
petrol
79bhp/10.91kg
m
1070kg 3947/1690/1503
mm
4-6
lakh
July
2012
6 Force MPV 2.2-litre
diesel
139bhp/32.7kg
m
NA 4763/1338/2253
mm
10-15
lakh
Late
2012
7 Fiat Punto Evo 1.2-litre
petrol,
1.4-litre
petrol,
1.3-litre
67bhp/9.76kgm
,89bhp/
11.67kgm,
75bhp/20kgm,
90bhp/21.3kgm
1090-
1145kg
NA/1687/1495mm NA NA
74
diesel,
1.3-litre
diesel
8 Ford Eco Sport 1.2-litre
petrol,
1.5-litre
diesel
NA,
88.7bhp/20.8kg
m
NA NA 6-7.5
lakh
Early
2012
9 Ford Fiesta
Hatchback
1.5-litre
petrol,
1.5-litre
diesel
107bhp/14.2kg
m,
88.7bhp/20.8kg
m
1153kg 3950/1722/1475
mm
6.5
lakh
Mid
2012
10 HM
Ambassador
1.5-litre
diesel
NA NA NA 4.8
lakh
Early
2012
11 New Honda
CR-V
2.4-litre
petrol
NA NA NA 20
lakh
Late
2012
12 Mahindra-
Ssangyong
Korando
2-litre
diesel
173bhp/36.7kg
m
1672-
1692kg
4410/1830/1675
mm
15-17
lakh
Late
2012
13 Mahindra Reva
NXR
Electric
motor
NA 900kg/85
0kg
(NXR)
NA 3.5-4.5
lakh
Mid
2012
14 Mahindraverito
(sub-4 metres)
1.5-litre
diesel
65bhp/16.3kgm NA NA 4.8
lakh
End
2011
15 Mahindra Mini-
Xylo (sub-4
metres)
1.5-litre
diesel
NA NA NA 4-5
lakh
Early
2012
16 Maruti Alto 800 0.8-litre
petrol
NA NA NA 1.9-2.5
lakh
Early
2012
17 Mercedes-Benz
B-Class
1.8-litre
diesel, 1
135bhp/30.5kg
m, 156bhp/25.5
1395-
1475kg
4359/1786/1557
mm
18-22
lakh
Late
2012
75
.6-litre
turbo-
petrol
kgm
18 Nissan Evalia
(NV200)
1.5-litre
diesel
105bhp/24.4kg
m
1269kg 4400/1695/1860
mm
7.5-12
lakh
Early
2012
19 Renault Scala 1.5-litre
petrol,
1.5-litre
diesel
97bhp/13.6kgm
,
85bhp/20.4kgm
NA NA 7-9
lakh
Septe
mber
2012
20 New Porsche
911
3.4-litre
petrol,
3.8-litre
petrol
345bhp/39.8kg
m,394bhp/44.9
kgm
1455-
1470kg
4491/1808/1295
mm
From
Rs 90
lakh
Septe
mber
2012
21 Tata Manza CS
1.2-litre
petrol,
1.3-litre
diesel
65bhp/9.8kgm,
74bhp/19.3kgm
NA NA 5 lakh Late-
2012
22 Tata Safari
Storme
2.2-litre
diesel
140bhp/32.6kg
m
NA NA 11
lakh
Early
2012
23 New
Volkswagen
Beetle
1.4-litre
turbo-
petrol,
2-litre
diesel
158bhp/24.5kg
m,
138bhp/32.6kg
m
1360kg 4278/2021/2048 25
lakh
Late
2012
Source – AUTOCAR India (October 2011)
2.9 Top Ten Models of Personal Vehicles, in Indian market-
The fast changing Socio- economic pattern of Indian consumer having multiple
interest and complexion/variety in their choice of product also reflects in the domestic
Personal Vehicle purchased by them. Data relating to the sale of top 10 models of
76
personal vehicles for August 2011 have been presented through the following figures
to make them understandable at a glance,
Source- Autocar India
Fig: 2.6 Top Ten Models of PV sold in Aug. 2011
The above information established the following facts-
• In the PV segment it is the Maruti make which is the most preferred by Indian
consumer. 68 percent of total sale of such vehicles has been registered by the
models and makes manufactured by Maruti-Suzuki India Ltd.
• Small cars accounts for 85% preferred choice of the Indian PV consumers.
2.10. Auto component Industry: current status -
Indian Automobile industry is flourishing and expanding worldwide.The spine of the
automobile manufacturing industry is its suppliers of auto components and
accessories which is also an exclusive industrial segment.
The later globalization period enhanced the trade in all sectors which includes
automobile and auto components in top trading commodities. The new auto policy
helped to promote the auto sector worldwide. The cheap labor and resources in India
has captivated the attention of developed countries from long years back. Only on the
globalization the trade benefits came into clear picture and also India realized the
potential of the world market.
6554
6955
7005
7053
7206
7511
7856
9185
10913
23170
0 5000 10000 15000 20000 25000
Mahindra Bolero
Maruti Ritz
Tata Indica
Maruti Swift Dzire
Maruti Wagon R
Units Sold
77
2.10.1 Classification and Structure of Auto Component Industry
Auto component industry can be segmented on the basis of the production of
component types as below
• Engine Parts
• Gear
• Drive Transmission and Steering Parts
• Suspension and Brake Parts
• Electrical Parts
• Equipments
• Other Parts
In India the auto component industry is structured in three basic categories.
• Indian companies without any collaboration or having very minimal collaboration
with any foreign companies for e.g. Sundram Brake Lining, Sundram Fasteners.
• Indian companies with foreign collaboration, such as Indian Nippon Electricals,
Hinoday etc.
• MNCs completely owned subsidiaries or the units in which they have major control.
For e.g. Delphi, Visteon, Denso, MICO etc.
2.10.2 Evolution of Auto Components industry
The Auto component Industry is directly dependent on Auto manufacturing industry.
This industry was of very small size in the period of 1970s. The growth initiated after
the entry of Maruti Udyog Ltd. Which helped many new auto component
manufacturers emerged in 1980s. The Indian auto industry has evolved around three
major clusters geographically West, North & South of India, Major automotive
clusters – West of India-Mumbai, Pune, Nasik, and Aurangabad.
South - Chennai Bangalore, Hosur and North of India- Delhi, Gurgaon, Faridabad.
78
The set up of Tata motors, Bajaj, Mahindra & Mahindra, Skoda, General Motors etc.
and auto component manufacturers like Bharat Forge, DGP Hinoday, Kirloskar
Brothers, SKF Bearings, Kalyani Brakes etc.are all located in the west region.
Maruti Suzuki during 1990s created a base in the North accordingly the other auto
industry like Honda, Eicher etc., and auto component companies like Delphi, Denso
India, Lumax, Minda, Sona Koyo, Shriram Pistons etc., setup a hub in the central
North.
In the South region the auto & auto component industries are Ashok Leyland, Ford,
Toyota Kirloskar, Hyundai, TVS Motors, Brakes India, MICO, Lucas-TVS, Rane
Brakes, Sundram Fasteners etc. constituting a major hub.
The quality consciousness, value chain inherited through the automobile companies
towards the suppliers. Further the entry of more MNC’s & giant domestic auto
manufacturers prompted supply chain developments to enhance the productivity and
responsiveness towards both the ends suppliers as well as automobile companies.
The auto component industry can also be segmented through the supply chain
systems like first tier, second tier, third tier and fourth tier as the levels of supply
category and involvement in the supply chain of automobile company. The fourth tier
suppliers’ supplies raw material as small jobs while a second tier suppliers produces a
full auto components further the first tier suppliers identified as an OEMS/
Assemblers (Original equipment manufacturers). There are new direct suppliers, who
design systems and coordinate almost the entire chain encompassing the
manufacturing and assembly process and these are the Tier 1 and 0.5 who have major
involvement as a supplier in manufacturing of automobiles, they provide semi –
assembled modules of automobiles like steering system, rear axle system etc. which
can be directly fixed on the final assembly of the cars. The risks and challenges are
being transferred to the tier 1 &0.5 suppliers.
The total turnover of the Indian auto component industry was estimated at US$9
billion in 2006. The industry has the resources to manufacture the entire range of auto
products required for vehicle manufacturing, approximately 20,000 components. The
79
entry of global manufacturers into India during the 1990s enabled initiation of new
technologies, new products, improved quality and better efficiencies in operations.
This obviously acted as a catalyst to the local development of the auto component
industry.
The Indian auto component industry is widespread and highly fragmented. Estimates
by the Department of Heavy Industries, Government of India, indicate that there are
over 400 large firms who are part of the organized sector and cater largely to the
Original Equipment Manufacturers (OEMs). Approximately 10,000 firms exist in the
unorganized sector that operates in a tier-format. The firms in this segment operate in
low technology products and cater to Tier I and Tier II suppliers and also serve the
replacement market. Around 4% of the companies operating in the auto component
segment cater to 80% of the demand emanating from OEMs. Within the unorganized
segment, apart from supplying in the aftermarket, a number of players are also
involved in job work and contract manufacturing.
The Auto Component Manufacturers Association (ACMA) asserted the sector is
working towards the open market, a large number of joint ventures with leading
global manufacturers have already set up. The sector will grow at 15 percent CAGR
till the year 2012 and will achieve the position among the top five auto component
economies by 2025. The Industry is perceived tremendous potential for foreign direct
investments. The exports of auto components in 2006-07 soared to the US$ 3 billion,
which is remarkable. The ACMA estimates the global sourcing of components from
the country to double from US$ 2.95 to U.S$ 5.9 billion in 2008-09, and touch US$
20 billion within next seven years with the expansion of operations domestically and
overseas. The ACMA-Mckinsey tie-up vision anticipates the potential for the Indian
auto component industry to grow at US$ 40- 45 billion by 2015. The global auto
manufacturers look India as a salient manufacturing hub for auto components and
which rapidly gaining up the values of component they source from India.
The auto component sector has been one of the fastest growing segments of auto
industry, growing by over 28%, in nominal terms in the period 1995-98. The Industry
also sustained a high growth rate and could achieve growth of 24% in 2003, 16% in
80
2004-05 and 15% in 2005-06. The industry, over the years, developed the capability
of manufacturing all components required to manufacture vehicles, which is evident
from the high levels of indigenization achieved in the vehicle industry as well as the
components developed for the completely Indian made vehicles like the Tata Indica,
Tata Indigo, Mahindra Scorpio, Bajaj Pulsar and TVS Centra. The component
industry has now holistic capability to manufacture the entire range of auto-
components e.g. Engine parts, Drive, Transmission Parts, Suspension & Braking
Parts, Electricals, Body and Chassis Parts, Equipment etc. The component-wise share
of production, as indicated by the ACMA, is Engine parts-31%, Drive and
Transmission Parts-19%, Suspension & Braking Parts-12%, Electricals-9%, Body
and Chassis Parts-12%, Equipment-10%.
Over the last few years the Indian Auto Component Industry has created a robust
capacity base and world’s all major manufacturers have set up their manufacturing
unit in the country.
2.10.3 Growth Trends -
Low labor costs, availability of skilled labor and high quality consciousness among
Indian vendors have spurred the growth of auto component exports from India.
During 2003-2004, the exports of auto-components crossed the magic figure of US $
1 billion after having posted a healthy growth of 25%. During the year 2004- 2005,
the exports grew by 40% thereby taking the direct exports of components to a level of
US $ 1.4 billion. As per ACMA, in the year 2005-06 exports grew by 28% and
reached the level of US $ 1.8 billion. It is important to mention here that still it is very
low against the volume of world trade of 185 billion US $ in auto components.
More than 60% of the exports of auto-components are to USA and Europe, which
constitute high AQL (Accepted Quality Level) countries. Moreover, over the last 5
years, the structure of the customer base in the global markets has also undergone a
major change. In the 1990s more than 80% of the exports was to the international
aftermarket. In 2005, more than 70% of the exports are to the global OEMs and Tier 1
companies and only 30% is to the aftermarket. This signifies that the Indian
81
component industry has now reached a high degree of maturity in terms of quality
and productivity and has also developed capabilities in the area of design and
engineering, which are critical requirements for being a part of the global supply
chain.
Indian auto component manufacturing, currently constrained by lack of large
capacities, is slowly but steadily working on expanding capacities and automation
levels. As the users increasingly become discerning in their buying behavior, new
model introduction by the auto manufacturers has become the trend. Greater variety
in vehicle is offering challenges to the manufacturing capabilities and economies of
scale of component suppliers. Hence the component industry is constantly looking at
maintaining lean and efficient manufacturing systems. Having established themselves
in the domestic market, tapping opportunities abroad was a natural step for the auto
component manufacturers in their growth path. The Indian auto component industry
is targeting for a bigger share of the export market and is in the process of ramping up
its manufacturing capabilities to meet the capacity and quality requirements. During
2004, the auto component industry increased its investment by 17% while the
automation processes in this industry registered a growth of over 40%..
2.10.4 Challenges to auto component Industry.
From the current trends it may appears that auto- component industry is poised for
major growth, but this is not free from the challenges for the industry, policy
planners, government and other stake holders. Some of these challenges are
elaborated below.
2.10.4.1 Sustaining the growth rate.
There is a potential for much higher growth in the domestic market due to the fact
that the current car penetration level in India is just 7 cars per thousand. The increase
in purchasing power at the top echelon of about 300 million people in the country,
where the per capita income is over US $ 1000, implies that passenger car growth in
the domestic market is on the verge of a major and sustained boom. It is expected that
the passenger car market which was 1 million in 2003-2004 can easily cross the 3
82
million mark by 2015. This can lead to an increase in the size of the domestic auto-
component market from the current level of US $ 9.8 billion (2005-06) to at least US
$ 15 billion by 2015.
2.10.4.2 Need for innovations.
The competitiveness in the sector will largely depend on the capacity of the industries
to innovate and upgrade. The industry will also benefit if they have strong domestic
competition, home based suppliers and demanding local customers. There is no
denying of the fact that the factors like labor cost, duties, interest rate and economies
of scales are the most important determinants of competitiveness. But productivity is
the prime determinant of the competitiveness and also impacts the national per capita
income. The globally successful OEMs and auto makers will ultimately make their
base in places which are high on productivity factor and where essential competitive
advantages of the enterprise can be created and sustained. It would also involve core
products and process technology creation apart from maintaining productive human
resource and reward for advanced skills. The OEMs also look for the policies of the
state which stimulates innovations in new technologies.
2.10.4.3 Enhancement of share in global trade.
The global auto component industry is estimated to be US $ 1.2 trillion in value and
is likely to increase to US $ 1.7 trillion by 2015 as per ACMA. Sourcing from low
cost countries is likely to increase from US $ 65 billion in 2002 to US $ 375 billion
by 2015. Although India’s exports are still small (US $ 1.8 Billion in 2005-06 Prov.),
it could leverage this off shoring trend and the quality of its supply base to build
dominant top two position in auto component exports from low cost countries by
2015. A position In the top two would enable India to achieve export of US $ 20-25
billion by 2015. This would increase India’s share of world auto component trade
from 0.9 percent in 2005-06 (Prov.) to 2-2.5 percent by 2015, inclusive of domestic
consumption. Such a high growth in the Auto component Sector is expected to lead to
an additional 750,000 direct jobs in its sector along-with indirect employment of 1.8
million people over the next 10 years. In addition to creating incremental employment
83
of about 2.5 million people in direct and indirect jobs, it is also expected to result in
incremental revenue to the exchequer by US $ 3.8 billion. Investments in this sector
would also grow by US $ 15 billion from the current level of US $ 3.1 billion.
2.11 Initiatives of the Government of India for the growth of auto
sector.
In order to give a boost to the growth in this sector, the Government has taken several
initiatives. Some of them are as under.-
i. The Finance bill 2006 has given a further boost to the Automotive Industry by
reduction of the excise duty on the small cars. The reduction in the duty for raw
material to between 5 to 7.5% as compared to the earlier level of 10%, and the thrust
on infrastructure development.
ii. The Auto policy, 2002 recognizes the need to provide direction to the growth and
development of the automotive industry. As a result of constant persuasion by the
Department of Heavy Industry, some of the objectives of the Auto Policy have been
achieved. Imposition of excise duty on body building activity of Commercial
Vehicles, lower excise duty on the small cars, extension of 150% weighted deduction
on R&D expenditure to the automotive sector; increased budgetary allocation for
R&D activities in the sector and moving towards a lower duty regime are some of the
significant achievements and steps are being taken to further strengthen the capability
of the sector.