Indian Automotive Component Industry

“Engine of Growth Driving the Indian Manufacturing Sector

Indian Economy & Automotive Industry: In the Fast Lane!

India: A Growing & Stable Economy

1. A Stable, Market Based & Growth Oriented Economy

1. A Growing Automobile Industry

2. A Vibrant and Competitive Auto-Component Industry

A Stable, Market Oriented Economy

2.217.0

54.1

107.0136 142

73.2

020406080

100120140160

1990-91

1995-96

2001-02

2002-03

2003-04

2004-05

2005-06

Foreign exchange reserves ($ billion)

Foreign Exchange Reserves

5.83.8

8.57.5 8.1

10

4.37.2

3.44.7

6.55.53.6

0.02.04.06.08.0

10.012.0

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2007

Real GDP Growth Inflation

Exchange Rate is Market Driven

47.6948.4

45.9544.93

44.25

4243444546474849

2001-02 2002-03 2003-04 2004-05 2005-06Exchange Rate

3530

2520

15 12.5

0

10

20

30

40

2001 2002 2003 2004 2005 2006

Customs Tariff on Auto Components

(in %)

Continued Import Tariff Reduction

+

+

Real GDP and Inflation Growth(%)

Steady Reform Process

•Manufacturing & Imports free from Licensing & Approvals

•100% Foreign Direct Investment allowed in Auto Sector

•No Local Content Regulation in Auto Industry

•Foreign Exchange Convertible on Capital Account (under consideration)

Country Economic Political CBU Output Veh. Ownership/ Regulation Competitive Composite Regional LT Risk LT Risk Gr. Penetration Potential Enviorment Score Rank

India 4 8 9 10 8 3 42 =1Thailand 5 6 8 6 8 6 39 3Indonesia 4 3 3 9 7 7 33 =5South Korea 9 7 1 2 8 6 33 5Pakistan 1 2 8 9 6 7 33 =5China 8 2 5 9 6 2 32 =9Malaysia 7 3 7 4 6 5 32 =9Vietnam 1 1 1 9 6 8 26 =13

Asia/Pacific Business Environment Ranking

LT Economic Risk: Based on BMI Country Risk Service Long Term Economic risk rating, LT Political Risk: Based on BMICountry Risk Service Long Term political risk rating. CBU Output growth: Based on BMI forecast for 2004-2007 CBU production. Vehicle Ownership/Penetration Potential: Based on saturation of market. Regulation : Based on BMIBusiness Environment Rankings, Foreign Direct investment and industry regulations. Competitive Environment: Based on level of existing market competition. Composite Score: Unsighted total of Preceding six scores. Regional Rank: Highest composite score= most attractive auto sector environment within the Asia/Pacific region; Lowest composite score= least attractive. Source : BMI Research

The Future Automotive Growth Potential is Huge!

7

Has the potential to become one of the top 5 Automotive Economies by 2025 …..

USD billions

9,000

12,000

15,000

18,000

21,000

0

1,000

2,000

3,000

4,000

5,000

6,000

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

US

Japan

China

Germany India @ 8%

Italy

S Korea

UKIndia @ 6%

Real GDP *

MexicoFrance

Canada

India’s Ranking In World Motor Vehicle Production

Rank Countries Production Gr Rate(%)1 Japan 769,953 02 China 541,813 113 USA 357,834 394 India 202,435 325 Germany 193,774 196 Brazil 106,962 357 Spain 71,992 158 Indonesia 70,000 239 Mexico 64,329 28

10 Netherlands 58,442 1511 Russia 57,715 1512 France 50,143 15

World Total 2,691,887 14.6

Production of Heavy Trucks in Top 12 Countries in 2004(in Unit)

Rank Countries Production Gr Rate(%)1 Japan 8,720,385 32 Germany 5,192,101 13 USA 4,229,625 -64 France 3,227,416 05 Korea 3,122,600 136 Spain 2,399,374 07 China 2,316,262 158 Brail 1,756,166 179 UK 1,646,881 -1

10 Canada 1,335,464 011 India 1,178,354 3012 Russia 1,109,958 10

World Total 44,099,632 5.1

Production of Passenger Cars in Top 12 Countries in 2004 (in Unit)

Passenger Vehicle Production (Qty in ‘000 Nos.)

348

407 401 390 574513

564

608842

1028

1113

67 134 134 113 123 127 105 114 146 182 196

1309

415541 535 503

697640 669 722

988

1210

0

500

1,000

1,500

2,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Pass Cars MUV 's Pass Veh

1995-2000 CAGR

Pass Cars = 8%MUV’s = 14%Overall=9%

2009 2014

1575

207

2654

2772000-2005 CAGR

Pass Cars = 17%MUV’s = 9%Overall=15%

PROJECTED CAGR2005-2014

Pass Cars = 10%MUV’s = 4%Overall=9%

1782

2931

Source: McKinsey Report

LCVs, M & HCVs Production (Qty in ‘000 Nos.)

95

64

121

81

166

109

211

139

219

172

0

50

100

150

200

250

2001-02 2002-03 2003-04 2004-05 2005-06

M&HCVs LCVs

150

202

275

350 391

1995-2000 CAGRM & HCVs = 23%LCV’s = 28%Overall=27%

7.6

5.1 5.64.33.83.83.43.13.02.7

6.5

-2.04.06.08.0

10.012.014.016.018.020.022.024.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

2 Wheeler Production(in million Nos.)

CAGR1995-20007%

2009 2014

13.6

??

PROJECTED CAGR 2005-201416%

CAGR2000-200515%

98127150147

178

715

614

444333

290204

190

142122115 231 2 13 2455 4 4 5

-10

30

70

110

150

190

230

270

310

350

390

430

470

510

550

590

630

670

710

750

790

2001-02 2002-03 2003-04 2004-05 2005-06

Mini

Compact

Mid-size

Executive

Premium

Increasing Affordability is Driving Passenger Car Demand Rapidly Up the Price Ladder

(Qty in ‘000 Nos.)

Euro < 5,000

Euro 5000-8000

Euro 8,000-13,000

Euro 13,000-22,000

Euro 22,000 +

Upto 3400 mm

3401 – 4000mm

4001 – 4500 mm

4501 – 4700 mm

4701 – 5000 mm

Vehicle Exports are Rising

2 Wheelers

Cars & MUVs

CVs

265

180

367

513

129

72

166176

1117 30

41

-

50

100

150

200

250

300

350

400

450

500

550

2002-03 2003-04 2004-05 2005-06

2 Wheelers

Cars & MUVs

CVs

(+36%)

(+6%)

(+40)(Qty in '000 Nos.)

(+38%)

(+29%)

(+69%)(+55%)

(+79%)

(+47%)

INDIAN AUTOMOBILE INDUSTRY PRODUCTION : 4 WHEELERSTOTAL PRODUCTION 1,720,897

2005-06 2005-06(April-March) (April-March)

(Nos.) (Nos.)JAPANIES OEM KOREAN OEMMaruti Udyog Ltd 572,097 Hyundai Motor India Ltd 260,440Toyota Kirloskar Motor Pvt Ltd 44,975Honda Siel Cars India Ltd 41,361 AMERICAN OEMSwaraj Mazda Ltd 11,946 General Motors India Pvt Ltd 30,687Total 670,379 Ford India Pvt Ltd 26,946

Total 57,633EUROPEN OEMSkodaAuto India Pvt Ltd 9,767 INDIAN OEMDaimler Chrysler India Pvt. Ltd 1,780 Tata Motors Ltd 449,878Volvo India Pvt Ltd 1,004 Mahindra & Mahindra Ltd 128,601Tatra Trucks India Ltd 125 Ashok Leyland Ltd 65,085Fiat India Pvt Ltd 671 Force Motors Ltd 35,728Total 13,347 Eicher Motors Ltd 24,348

Hindustan Motors Ltd 15,458Total 719,098

INDIAN AUTOMOBILE INDUSTRY PRODUCTION : 2 WHEELERS

2005-06(April-March)

(Nos)JAPANIES OEMHero Honda Motors Ltd 3,006,486Honda Motorcycle & Scooter India (Pvt) Ltd 603,436Yamaha Motor India Pvt Ltd 248,665Suzuki Motorcycle India Pvt Ltd 2,328Total 3,860,915

INDIAN OEMBajaj Auto Ltd 2,042,289TVS Motor Company Ltd 1,366,866LML Ltd 107,044Kinetic Engineering Ltd 82,392Majestic Auto Ltd 56,819Kinetic Motor Company Ltd 53,880Royal Enfield (Unit of Eicher Ltd) 30,596 Total 3,739,886

TOTAL PRODUCTION 7,600,801

India : A Leading Competitive Country in The Auto Component Sector

Automotive Investments are Regionally Well-Balanced

NORTH

EAST

WEST

SOUTH

MAN

The Auto-Component Industry isgraduating to world-class

CertificationNo. of companies

456 ISO 9000

248 TS 16949

136 QS-9000

129 ISO 14001

32 OHSAS 18001

9 Deming Prize winners

4 JIPM Award

1 Japan Quality Medal winner

Total ACMA Member Companies

498

Suppliers Embracing Modern Shop-Floor Practices

1. 5-S, 7-W2. Kaizen3. TQM4. TPM5. 6-Sigma6. Lean Manufacturing

Auto Component Industry is Successfully Managing High Growth

10+8.7

6.75.4

4.54.03.93.33.1

0.0

5.0

10.0

15.0

20.0

25.0

1997 1998 1999 2000 2001 2002 2003 2004 2005

CAGR1997-20009%

(in US $ bln)40.00

25.00

20.00

2009

18.7

40

2014

CAGR2000-200520%

PROJECTED CAGR 2005-201417%

Source : ACMA McKinsey Report

And Covers A Comprehensive Production Range

Electrical Parts9%

Equipments10%

Suspension & Braking Parts

12%

Engine Parts31%

Drive Transmission

& Steering Parts19%

Body & Chassis

12%

Others7%

Indian Suppliers Are Gearing Up for Exports

1.8

1.4

1.0

0.80.6

0.3 0.4 0.50.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1997 1998 1999 2000 2001 2002 2003 2004 2005

25,0

20.0

7.0

PROJECTED CAGR 2005-201434%CAGR

1997-200026%

(in US$ billion)

2009

5.9

25.0

2014

20.0CAGR2000-200525%

America26%

Europe36%

Asia16%

Africa10%

Others0.5%

Oceania1.5%Middle East

10%

Indian Component Industry is Fast Emerging asAn Attractive OEM/Tier 1 Supplier

OEM/TIER 175% Aftermarket

25%

COMPOSITION OF EXPORTS -2006Aftermarket

65%OEM/TIER 135%

1990s 2006

Most Automotive MNCs have operations in IndiaA Few Global Suppliers

Engine Valves & Steering systems, braking systems & auto electricalcomponentsTRW

Automotive Seating & Interior componentsFaurecia

Product RangeSupplier

Aisin Seiki

Johnson Controls

Lear

Denso

Visteon

Bosch

Delphi

Door Latch, window regulator, door hinge, sheet locking components

Seating Systems & batteries

Electronic & auto electrical components

Auto electrical components, alternator starter, wiper motor, engine coolingfan, washer pump, ventilator, fuel pumps, injectors, engine ECU’s, speed control valves, radiators, air-conditioners, HVAC units and heaters

Air Conditioning systems, Engine cooling systems, exterior & interiorsystems (including instruments panel

Development Centre for Electronic Diesel Injection Systems, Spark Plugs& Diesel components

Steering Systems, Wiring Harness & Driveshafts, Catalytic Convertors, Canisters and a large Technology Centre

A Few Global Suppliers Present in IndiaCont…

Driveshaft assemblies, CV Joints, sintered bearings/parts, sinteredautomotive components, filters and metal powdersGKN

TyresContinental

Product RangeSupplier

Yazaki

ArvinMeritor

Thyssen Krupp

ZF

Dana

Siemens VDO

Valeo

Wiring Harness

Light Vehicle Systems & Commercial Vehicle Systems Groups

Automotive products

Integral Hydraulic power steering gears & mechnical steering gears, Steering Columns & shafts

Clutch, Piston Rings, Axle Housings

Automotive Dashboard instruments & accessories

Rear Combination Lamps

Indian Companies are …

Substantially increasing investments in production capacities

Establishing partnerships in India and abroad

Investing in or acquiring companies Overseas

Establishing green-field manufacturing footprintsoverseas.

Indian Companies Investing OverseasSome Examples

Tata Motors Daewoo Commercial vehicles Plant, Korea

Mahindra & Mahindra Jiangling Motor Company, ChinaSar Auto Products Ltd.

Bharat Forge Ltd Carl Dan Peddinghaus, Germany CDP Aluminiumtechnik Germany Federal Forge, USAImatra Kilsta AB, Sweden Scottish Stampings Ltd., Scotland

Motherson Sumi WOCO Group, GermanyG&S Kunststofftechnik

Amtek Auto GWK, UKNew Smith Jones Inc of USA.Zelter, Germany

UCAL Fuel Systems AMTEC Precision Products Inc, USA

Indian Companies Investing OverseasSome Examples

Sundram Fasteners Ltd Bleisthal Produktions Gmbh, Precision Forging unit of Dana Spicer (UK)Cramlington Forge, UKGreenfield Plant in Zhejiang, ChinaCDP GMBH

El Forge Ltd Shakespeare Forging, UK

TVS Logistics Services CJ Components, Ltd, UK

TVS Autolec Ltd RBI Autoparts SND BHD, Malaysia

Sona Koyo Fuji Autotech, France

Competitive Technical Expertise

Growing Capability of Indian Component Suppliers

1. Proficiency in Understanding Technical Drawings and wellconversant in all Global Automotive Standards : American, Japanese, Korean, European Standards etc.

2. Appropriate Automation leading to economic production costs

3. Flexibility in small-batch production.

4. Growing IT Capability for Design, Development & Simulation

World Class –Designed & Manufactured in India

Mahindra Scorpio TVS Scooty

Tata Indica

Bajaj Pulsar

Tata Indigo Tata ACE

Rhino

India – The next Big Automotive R&D Base

1. Global MNCs Shifting Automotive Design Centers into India.

2. An Excellent base for Prototyping, Testing, Validating and Productionizing of Auto-Components.

3. World renowned IT Skills with excellent Automotive Domain Knowledge.

Some Design & Research Centers in India

Cummins

Integrating with Global Technical Standards...

EmissionsEmissions

India has joined

WP-29 :1998 Agreement

For Global Harmonisation of Automotive Standards

SafetySafety

NoiseNoise

NATRIP Project Funded by Government of India

Global Consultants : IDIADA, Spain + AVL

Delhi Centre Testing + Homologation + Product/Process Validation

Chennai Center Pre-Competitive R&D and Homologation Testing

Pune Centers Product/Process Validation + Pre-Competitive R&D(ARAI + VRDE)

Indore Center 4100 acres Proving Ground

Rae Barelli Center for Tractors and Parts + Off-Road Vehicles

Silchar Hill Driving Institute

The Way Forward…

The Way Forward...

• Indian automotive players are now investing in ASEAN Region:-

•TVS Group investing in Indonesia to manufacture 2-wheelers.

•Bajaj Group investing in Indonesia to manufacture 2-wheelers

• Many Indian component manufacturers considering investing in ASEAN to cater to the growing auto industry in ASEAN.

The Way Forward...

• Japanese auto industry is seriously looking at India with renewed interest. This would result in :-

• Larger Japanese investments in India in automotive sector

• Substantial outsourcing of components from India to Japan.

• The FTA between India and ASEAN would offer many opportunities for direct trade and investments between India and ASEAN countries.

ACMA : A Gateway to India

ACMA & its Services

Interaction with Government/Agencies on:Exim, Fiscal, Industrial, Transport & other policies

Government Networking Services

Business Enhancement Services

International Business Development

Domestic Business Development

Technical Services through ACT (Technology Centre)

TechnologyBuilding CompetenciesStandardizationBenchmarking Services

Publications

Supplier’s GuideStatistical Analysis of the Component IndustryCountry ReportsNewsletters

ACMA’s website: Information Technology Services www.acmainfo.com

ACMA –“The Link to Indian Auto component Industry”

Initial Research &Shortlisting of Cos

Promote One to one Contact

Evaluation andNegotiation

ThruACMA &

ACMA Database

Thru ACMA Trade Fairs, Missions, Industry Visits &Customised Outsourcing

Summits

Directly bythe concerned

parties