Automotive Industry On Fast Track

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

India - An Introduction Population States/UTs Geographical Area Languages recognised Business language Per Capita Income** GDP** Over 1 bn 35 3.3 mn sq kms 22 English US$ 534 US$ 650 bn The world is waking up to the opportunity that is India. - Spread over 3.3 million sq kms, the geographical spread and the regional diversity found in this country is unmatched by any other place in the world. - Our human capital is our most distinguishing factor. **(at factor cost & at current prices) 1USD=43.54 INR (as on July 4, 2005) Source:CSO Statistics

India - Fast pace Growth Largest democracy 4th largest economy by PPP index 6th largest energy consumer ForEx reserves skyrocket from USD 42 bn (2001) to US$ 133 bn ((February, 2005) GDP growth to continue between 6-8% 3rd largest economy by 2050: Goldman Sachs Leading in IT & BPO Oil & Gas and Biotechnology sunrise industries Our socio-economic credentials are strong: - India is the largest and a most vibrant democracy. - In PPP terms, it ranks the 4th largest economy globally. - In fact, according to Goldman Sachs we are geared to be the world`s 3rd largest economy by 2010.

India - Leading the world Hero Honda - largest manufacturer of motorcycles Moser Baer - among the top three media manufacturers in the world Pharmaceutical Industry - 4th largest in the world Walmart, GAP, Hilfiger sources more than USD 1bn worth apparel from India 100 Fortune 500 have set R&D facilities in India including GE, Delphi, Eli Lilly, HP, Heinz and Daimler Chrysler Indian industry has a story to narrate to the world in almost every sector: - Hero Honda is the largest manufacturer of motorcycles - India`s Pharmaceutical Industry is the 4th largest in the world. - The country is a global R & D hub. More than a 100 Fortune 500 companies have set up R&D facilities in India.

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

Passenger Car Market 2007-08 (P) 2002-03 (A) Total Units - 975,703 The Indian automotive industry has been witness to dynamic growth over the years. The Indian passenger car market is projected to reach one million annual car sale by 2007-08. The market is projected to grow at a compounded annual growth rate (CAGR) of 12.3% over the next few years. Growth in the mid-size and premium car segments is expected to outpace the overall market growth. These two segments together are projected to constitute nearly a quarter of the 1 million car market by 2007-08. Projected CAGR 12.3%

Average two-wheelers per 1000 people Two Wheeler Market Present estimated size 5.4 mn units per year CAGR (last 5 years) 10% Average two-wheelers per 1000 people India 27 China 08 India represents one of the largest two-wheeler markets in the world, with an estimated size of 5.4 million units a year. India is the two-wheeler capital of Asia with an average of 27 two-wheelers per thousand people, compared to China’s 8 two-wheelers per thousand people .

Auto Component Market Estimated market size US$ 6.7 bn Projected CAGR 15% Presently a US$ 6.7 bn industry,the Indian auto ancillary industry is expected to touch US$ 17 bn by 2012. Nearly two-thirds of the auto component production is consumed directly by Original Equipment Manufacturers(OEMs).

Auto Component Industry Structure 16 Cos 50 ~ 500 Mill US $ 149 Cos 5 ~ 50 Mill US $ The Indian auto parts industry is significantly fragmented with a large number of players having a turnover of less than US$10 million per year. The industry directly employs about 2,50,000 people and has an annual turnover over US$ 56.3 billion. 237 Cos 1 ~ 5 Mill US $

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

Home to global players Product Players Cars/SUVs Suzuki, Honda, Toyota, Mitsubishi, GM, Ford, Daimler- Chrysler, Skoda, Fiat, Hyundai, Tata, M&M Two-wheelers TVS, Hero Honda, Bajaj, Yamaha, Kinetic, LML CVs Tata, Ashok Leyland, Tatra, Eicher- Mitsubishi, Swaraj-Mazda, M&M, Volvo Tractors Escorts, M&M, L&T, Punjab Tractors, New Holland, ITL- Renault, John-Deere, Steyr Most global majors are now in India - be it in passenger cars, two-wheelers, commercial vehicles or tractors. Several new players have entered the Indian auto market industry, including DaimlerChrysler, Fiat, Ford, General Motors, Hyundai, Toyota Motor and Honda.

Manufacturing Hub for Vehicles Hyundai - Export Base for Small Cars Skoda - Hub for exports of Cars to neighbouring countries Ford exporting CKDs of Ikon to South Africa & other countries Mitsubishi & Yamaha - Hub for 125 cc Motorcycles Korean car manufacturer, Hyundai has made India the global sourcing base for its small cars and targets exports volumes for 2005 of 70,000 cars. Similarly, Suzuki, Japan is using India as the sourcing base for its small car. Maruti Suzuki- Exports cars to EU HMSI - Hub for Two Wheelers Exports

Hyundai Motors India Made India its global sourcing base for small cars Second largest player in passenger car market Market Share 20% Turnover (approx.) US$ 1 billion Hyundai Motor India Ltd (HMIL) was set up in 1996 as a wholly owned subsidiary of Hyundai Motors, Korea. The company currently is the 2nd largest player in the passenger car market in the country with a current market share of 20% and a turnover of approximately US $1 billion. The company plans to roll its 1 millionth vehicle by 2006. Santro & Accent - Run away success stories

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

Invest in India Excellent Source for IT based Twin Indian Advantages… Scaling Costs Optimising Resources India represents a substantial cost advantage, which global OEMs and component manufacturers are leveraging to drive down costs and build growth options. On the cost front, OEMs eyeing India in a big way to source products and components at significant discounts to home market. On the revenue side, OEMs are active in the booming passenger car market in India. Excellent Source for IT based Engineering Solutions - for Product & Process Integration

India - Manufacturing Hub for Components Toyota Motors Global Hub for Transmissions Daimler Chrysler sourcing > 70 million Euro Ford full fledged component sourcing team India offers a low-cost manufacturing base for auto components. Experience of several e-procurement platforms indicates that, on an average, global buyers save between 10-20% by sourcing components from India. Examples of world-class players fulfilling such demand today are Sundram Fasteners, Sundaram Clayton, Bharat Forge and Rico Auto, which supply to global majors like DaimlerChrysler, Ford, General Motors, land Rover. Fiat sourcing components

Export from India Passenger Cars The Indian automotive export industry has covered significant ground to reach international standards in quality, reliability and technology of its products. This is borne out by the phenomenal auto export growth witnessed by the country over the last 3-4 years. Passenger vehicle exports have grown over five times in the last four years, and are set to cross 100,000 cars in 2003-04. Two-wheeler exports have more than doubled over the last four years.

Export from India Auto Components expand markets abroad The main features of India’s auto component industry are high product quality, superior design and engineering capabilities. These are suitably backed by a large domestic market and government regulations, making India a preferred outsourcing destination. Indian auto ancillary exports have multiplied over the last five years, growing at a CAGR of 26% between 1999-2000 to 2003-04.

Buy from India General Motors, USA - Global Purchasing Team (Halol) Major OEMs/ Tier 1 suppliers buying auto-components from India for their global requirements General Motors, USA - Global Purchasing Team (Halol) Volvo, Sweden - Global Buying Team (Bangalore ) International Truck & Engine Co - Global Purchasing Cummins, USA - Global Purchase Team (Pune) Caterpillar, USA - Global purchase staff (Delhi) Delphi, USA - International Purchase Office Motorola Automotive Electronics Division, USA Visteon exporting India-made components worldwide Global automobile companies are aggressive in the Indian market to find sourcing partners in India to meet their ambitious cost-cutting plans. .Both OEMs and their Tier I vendors like Ford, Volvo, Robert Bosch and Cummins have set-up teams in India to explore such opportunities, attracted by the country’s availability of low-cost, skilled engineering manpower.

This ratio projected to Sell to India Large latent demand as… Low car penetration ratio 5 per thousand persons This ratio projected to double by 2007-08 India's current car penetration is one of the lowest in the world at five cars per thousand persons, compared with ninety cars per thousand people for other developing countries like South Africa and Brazil in 2001 This represents a huge latent demand for a large economy like India, which is projected to grow at a phenomenal rate over the next five years. Car penetration ratio is projected to double by 2007-08.

OEMs leverage local manufacturers for Contract Manufacturing Partner with India OEMs leverage local manufacturers for Contract Manufacturing Mitsubishi and Ford tie-up with Hindustan Motors Kawasaki ties-up with Bajaj OEMs are also leveraging the local manufacturers for contract manufacturing. Mitsubishi has been successful using Hindustan Motors to manufacture its Lancer. Ford has recently entered into a strategic tie-up with Hindustan Motors to manufacture 20,000 petrol engines and transmissions for its Ford Ikon cars. Kawasaki has announced plans to outsource parts for sub 200 cc motorcycled from Bajaj, with which it has a technical tie up.

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

Advantage India Largest Two-Wheeler Manufacturer in the World 2nd Largest Tractor Manufacturer in the World 5th Largest Commercial Vehicle Manufacturer in the World # 1 Global Motorcycle Manufacturer is in India In recent years,The Indian auto industry has attained critical mass. The world’s 2nd Largest Tractor Manufacturer and the 5th Largest Commercial Vehicle Manufacturer are also Indian companies. 4th Largest Car Market in Asia - crossed the 1 million mark

Auto component exports cross US$ 1 bn mark Industry Milestones 2003-04 Car production crosses 1 million mark Car exports cross US$ 1 million mark In 2003-04,The Indian Automobiles Industry crossed some significant milestones : Car production crossed the 1 million mark Car exports crossed US$ 1 million mark Auto component exports crossed the US$ 1 billion mark Auto component exports cross US$ 1 bn mark

The Cost & Skills Advantage India offers yet another attractive option for global players on account of its low cost yet highly skilled labour market. OEMs can reduce the cost of engineering services, design, IT and other back-office related operations by remote sourcing to India. Ford Information Technology Services India (FITSI) will deliver high-quality solutions in business software, computer-aided engineering and call centre/e-mail processing. Ford expects to have annual labour cost savings of US $30-60 million.

The Market Advantage Fast paced urbanisation to rise from 28% to 40% by 2020 Upward migration of household income levels Middle class expanding by 30 - 40 million every year The Indian middle class is expanding by 30 - 40 million every year as a result of increase in per capita income. The demographic profile of the country is also moving towards the higher income classes .The penetration levels of consumer durables including auto is therefore set to increase significantly. India also has a very young population compared to the rest of the world. This implies that growth in consumer demand will be sustained by a younger generation which has a higher income generation capacity. Growing working population

The Quality & Productivity Advantage Auto Companies achieving high productivity through best practices: T Q M T P M Six Sigma Toyota Production Systems / Lean Quality is high on the priority of Indian auto manufacturers. Several Indian auto companies have won the Deming Prize for application of TQM.These include auto component companies like Brakes India and OEM majors like M&M and TVS Motor. Companies growing in ranks can offer PPM levels of quality

The Policy Advantage Auto Policy 2002 promotes an integrated automotive sector 2001- Quantitative Restrictions were removed Incentives for R & D Stringent environmental controls Key features of the Auto Policy, 2002 include: 100% Foreign direct investment (FDI) for manufacture of automobiles and components. Incentives for Research and Development (R&D): Fiscal incentives for promoting use of low emission auto fuel technology.

Emission Standards Status Emission Compliance From April 1, 2010 Bharat Stage IV From April 1, 2005 From April 1, 2008 Bharat Stage III Already introduced in Metros: Mini-Metros from Sept, 2003 Already introduced in Metros:Mini-Metros, from Sept, 2003 Bharat Stage II C V’s Two Wheelers Cars Emission Standards Status . The principal environmental standards in India are the Euro I and Euro II norms. The Government of India recently announced the National Auto Fuel Policy,which recommends Euro II (Bharat II) norms The Mashelkar Committee has recommended that Euro III equivalent emissions norms for all categories of vehicles be introduced in seven megacities from April 1, 2005 and extended to other parts of the country from 2010. Estimates suggest that the automobile industry would require investments in the range of range of USD 5-7 billion for manufacturing vehicles compatible with the proposed emission norms. Bharat Stage II, III, IV (Euro II, III and IV equivalent)

Indian Automotive Industry India - An Overview Market and Growth Potential Players Opportunities Why India? Contact in India

Contact in India Society of Indian Automobile Manufacturers (SIAM) Core 4B, 5th Floor, India Habitat Centre Lodi Road New Delhi - 110 003.India Tel: 0091 11 24647810- 12, 24648555 Fax: 0091 11 24648222 India offers a plethora of opportunity in the Automobiles Sector. For information on the industry, for partnership and investment, you can contact the Society of Indian Automobile Manufacturers (SIAM)

Contact in India Automotive Component Manufacturers Association of India (ACMA) 6th Floor The Capital Court, Olof Palme Marg, Munirka, New Delhi - 110 067 Tel.: 0091 11 2616 0315, 2617 5873, 2618 4479 Fax: 0091 11 2616 0317 E-mail: acma@vsnl.com Website: www.acmainfo.com