Automotive industry 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 11 million 2 and 4-wheeled
vehicles and exports about 1.5 million every year.[1] 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 2.6 million units in
2009.[3] In 2009, India emerged as Asia's fourth largest exporter of passenger cars,
behind Japan, South Korea and Thailand.[4]

As of 2009, India is home to 40 million passenger vehicles and more than 2.6 million
cars were sold in India in 2009 (an increase of 26%), making the country the second
fastest growing automobile market in the world.[5][6] 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.[7] By 2050, the country is
expected to top the world in car volumes with approximately 611 million vehicles on
the nation's roads.[8]

A major chunk of India's car manufacturing industry is based in and around the city
of Chennai, also known as the "Detroit of India".[9] with the Indian city accounting for
60 per cent of the country's automotive exports.[10] Gurgaon and Manesar near New
Delhi are hubs where all of the Maruti Suzuki cars in India are manufactured.[11] The
Chakan corridor near Pune, Maharashtra is another vehicular production hub with
General Motors, Volkswagen/ Skoda, Mahindra and Mahindra in the process of
setting up or already set up facilities.[12][13] Halol in Gujarat, Aurangabad in
Maharashtra, Kolkatta in West Bengal are some of the other automotive
manufacturing regions around the country.[14

History

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.[17] In February
2009, monthly sales of passenger cars in India exceeded 100,000 units [18] and has
since grown rapidly to a record monthly high of 182,992 units in October 2009[19].
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 [20]) this progression is unlikely to stop in
the coming decade [21]. Congestion of Indian roads, more than market demand, will
likely be the limiting factor [22].
The first car ran on India's roads in 1897. Until the 1930s, cars were imported
directly. Embryonic automotive industry emerged in India in the 1940s. 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 nationalisation 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.[23]

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 liberalisation 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.[

Supply Chain of Automobile Industry:

The supply chain of automotive industry in India is very similar to the supply chain of the
automotive industry in Europe and America. The orders of the industry arise from the bottom of
the supply chain i. e., from the consumers and goes through the automakers and climbs up until
the third tier suppliers. However the products, as channelled in every traditional automotive
industry, flow from the top of the supply chain to reach the consumers. Automakers in India are
the key to the supply chain and are responsible for the products and innovation in the industry.[1]

The description and the role of each of the contributors to the supply chain are discussed below.

Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic
and aluminium to the second tier suppliers.

Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier
Suppliers and OEMs. They work on designs provided by the first tier suppliers or OEMs. They
also provide engineering resources for detailed designs. Some of their services may include
welding, fabrication, shearing, bending etc.

First Tier Suppliers: These companies provide major systems directly to assemblers. These
companies have global coverage, in order to follow their customers to various locations around
the world. They design and innovate in order to provide “black-box” solutions for the
requirements of their customers. Black-box solutions are solutions created by suppliers using
their own technology to meet the performance and interface requirements set by assemblers.
First tier suppliers are responsible not only for the assembly of parts into complete units like
dashboard, breaks-axel-suspension, seats, or cockpit but also for the management of second-tier
suppliers.

Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After

researching consumers’ wants and needs, automakers begin designing models which are tailored
to consumers’ demands. The design process normally takes five years. These companies have
manufacturing units where engines are manufactured and parts supplied by first tier suppliers
and second tier suppliers are assembled. Automakers are the key to the supply chain of the
automotive industry. Examples of these companies are Tata Motors, Maruti Suzuki, Toyota, and
Honda. Innovation, design capability and branding are the main focus of these companies.

Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to
the authorised dealers of the companies. The dealers then sell the vehicles to the end customers.

Parts and Accessory: These companies provide products like tires, windshields, and air bags etc.
to automakers and dealers or directly to customers.

Service Providers: Some of the services to the customers include servicing of vehicles, repairing
parts, or financing of vehicles. Many dealers provide these services but, customers can also
choose to go to independent service providers.

Production statistics

The production of automobiles has greatly increased in the last decade. It passed the 1 million
mark during 2003-2004 and has more than doubled since.[24]

Total Vehicles
Year Car Production % Change Commercial % Change % Change
Prodn.
2009 2,166,238 17.34 466,456 -4.08 2,632,694 11.40
2008 1,846,051 7.74 486,277 -9.99 2,332,328 3.35
2007 1,713,479 16.33 540,250 -1.20 2,253,999 10.39
2006 1,473,000 16.53 546,808 50.74 2,019,808 19.36
2005 1,264,000 7.27 362, 755 9.00 1,628,755 7.22
2004 1,178,354 29.78 332,803 31.25 1,511,157 23.13
2003 907,968 28.98 253,555 32.86 1,161,523 22.96
2002 703,948 7.55 190,848 19.24 894796 8.96
2001 654,557 26.37 160,054 -43.52 814611 1.62
2000 517,957 -2.85 283,403 -0.58 801360 -2.10
1999 533,149 285,044 818193

Exports
India's automobile exports have grown consistently and reached $4.5 billion in
2009, with United Kingdom being India's largest export market followed by Italy,
Germany, Netherlands and South Africa.[25] India's automobile exports are expected
to cross $12 billion by 2014.[26]

According to New York Times, India's strong engineering base and expertise in the
manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of
manufacturing facilities of several automobile companies like Hyundai Motors,
Nissan, Toyota, Volkswagen and Suzuki.[27]

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors
plans to export 250,000 vehicles manufactured in its India plant by 2011.[28]
Similarly, General Motors announced its plans to export about 50,000 cars
manufactured in India by 2011.[29]

In September 2009, Ford Motors announced its plans to setup a plant in India with
an annual capacity of 250,000 cars for US$500 million. The cars will be
manufactured both for the Indian market and for export.[30] The company said that
the plant was a part of its plan to make India the hub for its global production
business.[31] Fiat Motors also announced that it would source more than US$1 billion
worth auto components from India.[32]

In July 2010, The Economic Times reported that PSA Peugeot Citroen was planning
to re-enter the Indian market[33] and open a production plant in Andhra Pradesh with
an annual capacity of 100,000 vehicles, investing EUR 700M in the operation [34].
PSA's intention to utilise this production facility for export purposes however
remains unclear as of December 2010.

In 2009 India (0.23m) surpassed China (0.16m) as Asia's fourth largest exporter of
cars after Japan (1.77m), Korea (1.12m) and Thailand (0.26m) by allowing foreign
carmakers 100% ownership of factories in India, which China does not allow.[4]

In recent years, India has emerged as a leading center for the manufacture of small
cars. Hyundai, the biggest exporter from the country, now ships more than 250,000
cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki
also manufactures small cars for Nissan, which sells them in Europe. Nissan will also
export small cars from its new Indian assembly line. Tata Motors exports its
passenger vehicles to Asian and African markets, and is in preparation to launch
electric vehicles in Europe in 2010. The firm is also planning to launch an electric
version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is
preparing to introduce its pickup trucks and small SUV models in the U.S. market.
Bajaj Auto is designing a low-cost car for the Renault Nissan Automotive India,
which will market the product worldwide. Renault Nissan may also join domestic
commercial vehicle manufacturer Ashok Leyland in another small car project.[35]
While the possibilities are impressive, there are challenges that could thwart future
growth of the Indian automobile industry. Since the demand for automobiles in
recent years is directly linked to overall economic expansion and rising personal
incomes, industry growth will slow if the economy weakens.[35]

Indian automotive companies

• Chinkara Motors[56]: Beachster, Hammer, Roadster 1.8S, Rockster, Jeepster,

Sailster

• Hindustan Motors[57]: Ambassador

• ICML[58]: Rhino Rx

• Mahindra[59]: Major, Xylo, Scorpio, Bolero, Thar

• Premier Automobiles Limited[60]: Sigma, RiO

• San Motors[61]: Storm

• Tata Motors[62]: Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo CS,
Sumo, Safari, Xenon, Aria

Foreign automotive companies in India

Vehicles manufactured or assembled in India

• BMW India[64]: 1 Series, 3 Series, 5 Series.

• Fiat India[65] (in collaboration with Tata Motors): Grande Punto, Linea, Palio
Stile.

• Ford India[66]: Ford Figo, Ikon, Fiesta, Endeavour.

• General Motors India[67]

• Chevrolet (CSPIL)[68]: Spark, Beat, Aveo U-VA, Aveo, Optra,

Cruze, Tavera.

• Honda Siel[69]: Jazz, City, Civic, Accord.

• Hyundai Motor India[70]: Santro, i10, i20, Accent, Verna Transform, Sonata
Transform.

• Mahindra Renault[71]: Logan

• Maruti Suzuki[72]: 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire,
SX4, Omni, Versa, Eeco, Gypsy, Grand Vitara

• Mercedes-Benz India: C-Class, E-Class.

 • Mitsubishi[73] (in collaboration with Hindustan Motors)[74]: Lancer, Lancer
Cedia, Pajero

• Nissan Motor India[75]: Micra.

• Toyota Kirloskar[76]: Etios, Corolla, Innova, Camry.

• Volkswagen India[77][78]: Polo, Vento, Jetta, Passat.

• Audi India: A4, A6, Q5.

• Škoda Auto India[79][80]: Fabia, Octavia, Laura, Superb.

[edit] Vehicles imported to India

• Audi[81]: A8, S4, S6, S8, TT, R8, Q5, Q7.

• Bentley[82][83]: Arnage, Azure, Brooklands, Continental GT, Continental Flying
Spur, Mulsanne.
• BMW[84]: 5 Series GT, 6 Series, 7 Series, X1, X3, X5, X6, X6 M, M3, M5, M6
and Z4.
• Bugatti[85]: Veyron
• Chevrolet: Captiva.
• Fiat[65]: 500, Bravo.
• General Motors[67]: Hummer H2, Hummer H3.
• Honda[86][87]: Civic Hybrid, CR-V.
• Hyundai[70]: Santa Fe.
• Jaguar[88]: XF, XJ, XK.
• Lamborghini[89]: Gallardo, Murciélago.
• Land Rover[90]: Range Rover, Range Rover Sport, Discovery 4, Freelander 2.
• Maybach[91]: 57 and 62.
• Mercedes-Benz[92]: CL-Class, GL-Class, M-Class, R-Class, CLS-Class, S-Class,
SL-Class, SLK-Class, Viano, SLS.
• Mitsubishi: Montero, Outlander, Evo X.
• Nissan[93]: Teana, X-Trail, 370Z, GT-R.
• Porsche[94][95]: 911, Boxster, Panamera, Cayman, Cayenne.
• Rolls Royce[96]: Ghost, Phantom, Phantom Coupé, Phantom Drophead Coupé.
• Škoda[79]: Yeti, Superb.
• Suzuki: Grand Vitara.
• Toyota[76]: Land Cruiser, Land Cruiser Prado, Fortuner*, Prius.
• Volkswagen[97]: Beetle, Tiguan, Touareg, Phaeton.
• Volvo[98]: S60, S80, XC60, XC90.

* Toyota Fortuner is imported from Toyota Motor Thailand Company Limited as CKD

Automobile Domestic Sales Trends (Number of Vehicles)

Categor 2003- 2004- 2005- 2006- 2007- 2008- 2009-10
y 04 05 06 07 08 09
Passeng
1,061,57 1,143,07 1,379,97 1,549,88 1,552,70 1,949,77
er 902,096
2 6 9 2 3 6
Vehicles
Commer
cial 260,114 318,430 351,041 467,765 490,494 384,194 531,395
Vehicles
Three
Wheeler 284,078 307,862 359,920 403,910 364,781 349,727 440,368
s
Two
5,364,24 6,209,76 7,052,39 7,872,33 7,249,27 7,437,61 9,371,23
Wheeler
9 5 1 4 8 9 1
s
Grand 6,810,5 7,897,6 8,906,4 10,123, 9,654,4 9,724,2 12,292,
Total 37 29 28 988 35 43 770

Automobile Production Trends (Number of Vehicles)

Categor 2003- 2004- 2005- 2006- 2007- 2008- 2009-10

y 04 05 06 07 08 09
Passeng
1,209,8 1,309,3 1,545,22 1,777,58 1,838,59 2,351,24
er 989,560
76 00 3 3 3 0
Vehicles
Commer
cial 275,040 353,703 391,083 519,982 549,006 416,870 566,608
Vehicles
Three
Wheeler 356,223 374,445 434,423 556,126 500,660 497,020 619,093
s
Two
5,622,7 6,529,8 7,608,6 8,466,66 8,026,68 8,419,79 10,512,8
Wheeler
41 29 97 6 1 2 89
s
Grand 7,243,5 8,467,8 9,743,5 11,087, 10,853, 11,172, 14,049,
Total 64 53 03 997 930 275 830