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Automotive industry in India

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 17.5 million vehicles (including 2 wheeled and 4 wheeled) and exports about 2.33 million every year.[1] It is the world's second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009.[2] 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.[3] 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.[4] In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand.[5] 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.[6] [7] 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.[8] By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.[9]

Mahindra Scorpio, one of India's best selling indigenously developed SUV.

Foreign carmakers have built plants in India.

A chunk of India's car manufacturing industry is based in and around Chennai, also known as the "Detroit of India"[10] 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.[11] Gurgaon and Manesar in Haryana are hubs where all of the Maruti Suzuki cars in India are manufactured.[12] 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[13] [14] 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.[15] [16] [17]

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.[18] The company soon branched out into the manufacture of light commercial vehicles (LCVs) and agricultural tractors.[19] 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

Automotive industry in India ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.[20] 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.[20] 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.[21] In February 2009, monthly sales of passenger cars in India exceeded 100,000 units[22] and has since grown rapidly to a record monthly high of 182,992 units in October 2009.[23] 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 [24] ) this progression is unlikely to stop in the coming decade.[25] Congestion of Indian roads, more than market demand, will likely be the limiting factor.[26] SIAM is the apex industry body representing all the vehicle manufacturers, home-grown and international, in India.[27]

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

Supply Chain of Indian Automobile Industry


Automotive industry in India 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.[28]
Year 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 Car Production 2,814,584 2,175,220 1,846,051 1,713,479 1,473,000 1,264,000 1,178,354 907,968 703,948 654,557 517,957 533,149 % Change 29.39 17.83 7.74 16.33 16.53 7.27 29.78 28.98 7.55 26.37 -2.85 Commercial 722,199 466,330 486,277 540,250 546,808 362, 755 332,803 253,555 190,848 160,054 283,403 285,044 % Change 54.86 -4.10 -9.99 -1.20 50.74 9.00 31.25 32.86 19.24 -43.52 -0.58 Total Vehicles Prodn. 3,536,783 2,641,550 2,332,328 2,253,999 2,019,808 1,628,755 1,511,157 1,161,523 894796 814611 801360 818193 % Change 33.89 13.25 3.35 10.39 19.36 7.22 23.13 22.96 8.96 1.62 -2.10

Emission norms
In tune with international standards to reduce vehicular pollution, the central government unveiled the standards titled 'India 2000' in 2000 with later upgraded guidelines as 'Bharat Stage'. These standards are quite similar to the more stringent European standards and have been traditionally implemented in a phased manner, with the latest upgrade getting implemented in 13 cities and later, in the rest of the nation. Delhi(NCR), Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur, Lucknow, Solapur, and Agra are the 13 cities where Bharat Stage IV has been imposed while the rest of the nation is still under Bharat Stage III.

Automotive industry in India

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.[29] India's automobile exports are expected to cross $12 billion by 2014.[30] 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.[31]

Mahindra Scorpio Jeep in service with the Italy's CNSAS.

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.[32] Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.[33] 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.[34] The company said that the plant was a part of its plan to make India the hub for its global production business.[35] Fiat Motors also announced that it would source more than US$1 billion worth auto components from India.[36] In July 2010, The Economic Times reported that PSA Peugeot Citroen was planning to re-enter the Indian market and open a production plant in Andhra Pradesh with an annual capacity of 100,000 vehicles, investing EUR 700M in the operation.[37] 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.[5] 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 A Tata Safari on display in Poznan, Poland. 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.[38] 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.[38]

Automotive industry in India

Passenger vehicles in India

This list is of cars that are officially available and serviced in India. While other cars can be imported to the country at a steep 110% import duty, car-makers such as Alfa Romeo,[39] Ferrari,[40] McLaren,[41] Cadillac,[42] Chrysler,[43] SSC,[44] Zenvo,[45] MINI,[46] Smart,[47] Daihatsu,[48] Lexus,[49] Infiniti,[50] Acura,[51] Saab,[52] Spyker,[53] Lotus,[54] Renault,[55] Peugeot-Citroen,[56] Mazda,[57] Jeep,[58] SsangYong,[59] Kia[60] , GAZ[61] and Proton[62] are in varying stages of official introduction to the Indian automobile market.

Indian automotive companies

Chinkara Motors[63] : Beachster, Hammer, Roadster 1.8S, Rockster, Jeepster, Sailster Hindustan Motors[64] : Ambassador ICML[65] : Rhino Rx Mahindra[66] : Major, Xylo, Scorpio, Bolero, Thar, Genio Premier Automobiles Limited[67] : Sigma, RiO San Motors[68] : Storm Tata Motors[69] : Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo CS, Sumo, Venture, Safari, Xenon, Aria

Foreign automotive companies in India

Vehicles manufactured or assembled in India BMW India[71] : 1 Series, 3 Series, 5 Series, X1. Fiat India[72] (in collaboration with Tata Motors): Grande Punto, Linea. Ford India[73] : Figo, Ikon, Fiesta, Endeavour. General Motors India[74] Chevrolet[75] : Spark, Beat, Aveo U-VA, Aveo, Optra, Cruze, Tavera. Honda Siel[76] : Jazz, City, Civic, Accord. Hyundai Motor India[77] : Santro, i10, i20, Accent, Verna Transform, Sonata Transform. Mahindra Renault[78] : Logan. Maruti Suzuki[79] : 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift DZire, SX4, Omni, Versa, Eeco, Gypsy. Mercedes-Benz India: C-Class, E-Class. Mitsubishi[80] (in collaboration with Hindustan Motors):[81] Lancer, Lancer Cedia, Pajero Nissan Motor India[82] : Micra. Toyota Kirloskar[83] : Etios, Corolla, Innova. Volkswagen India[84] [85] : Polo, Vento, Jetta, Passat. Audi India: A4, A6. koda Auto India[86] [87] : Fabia, Laura, Superb, Yeti.
Maruti Swift. Maruti Suzuki, a subsidiary of Japan's Suzuki Motor, is the largest automobile [70] manufacturer in India. Manufactured only in Chennai, India, the i10 is one of Hyundai's best selling globally exported cars.

Opel was present in India until 2006. As of 2011, Opel only provides spare parts and vehicle servicing to existing Opel vehicle owners.

Automotive industry in India Vehicles brought into India as CBUs Aston Martin[88] : Vantage, Rapide, Virage, DB9, DBS, One-77. Audi[89] : A8, S4, S6, S8, TT, R8, Q5, Q7. Bentley[90] [91] : Arnage, Azure, Brooklands, Continental GT, Continental Flying Spur, Mulsanne. BMW[92] : 5 Series GT, 6 Series, 7 Series, X3, X5, X6, X6 M, M3, M5, M6 and Z4. Bugatti[93] [94] : Veyron. Chevrolet: Captiva. Fiat[72] : 500, Bravo. General Motors[74] : Hummer H2, Hummer H3. Honda[95] [96] : Civic Hybrid, CR-V. Hyundai[77] : Santa Fe. Jaguar[97] : XF, XJ, XK. Koenigsegg[98] [99] : CCX, CCXR, Agera. Lamborghini[100] : Gallardo, Murcilago. Land Rover[101] : Freelander 2, Discovery 4, Range Rover, Range Rover Sport. Maserati[102] : Quattroporte, GranTurismo, GranCabrio. Maybach[103] : 57 and 62.

Mercedes-Benz[104] : CL-Class, GL-Class, M-Class, R-Class, CLS-Class, S-Class, SL-Class, SLK-Class, Viano, G-Class, SLS. Mitsubishi: Montero, Outlander, Evo X. Nissan[105] : Teana, X-Trail, 370Z, GT-R. Porsche[106] [107] : 997, Boxster, Panamera, Cayman, Cayenne, Carrera GT. Rolls Royce[108] : Ghost, Phantom, Phantom Coup, Phantom Drophead Coup. koda[86] : Yeti, Superb. Suzuki: Grand Vitara, Kizashi. Toyota[83] : Prius, Camry, Fortuner*, Land Cruiser, Land Cruiser Prado. Volkswagen[109] : Beetle, Tiguan, Touareg, Phaeton. Volvo[110] : S60, S80, XC60, XC90.
*Toyota Fortuner is imported as a CKD kit from Toyota Motor Thailand.

Commercial vehicle manufacturers in India

Indian brands
Force[111] Hindustan Motors[112] Premier[67] Tata[113] AMW[114] Eicher Motors[115]

Automotive industry in India

Joint Venture Brands

VE Commercial Vehicles Limited[116] - VE Commercial Vehicles limited - A JV between Volvo Groups & Eicher Motors Limited. Ashok Leyland[117] - originally a JV between Ashok Motors and Leyland Motors, now 51% owned by Hinduja Group Mahindra Navistar[118] - a 51:49 JV between Mahindra Group and Navistar International Swaraj Mazda[119] - originally a JV between Punjab Tractors and Mazda, now 53.5% owned by Sumitomo Group Kamaz Vectra[120] - A JV between Russia's KaMAZ and the Vectra Group

Foreign brands
Volvo[121] Tatra[122] MAN[123] - as a JV with Force Motors, makes MAN Trucks in India Mercedes-Benz[124] sells luxury buses in India Daimler AG[125] - manufactures BharatBenz, a brand of trucks based on the Fuso and the Mercedes Benz truck platforms, which Daimler AG owns Scania[126] Iveco[127] Hino[128] Isuzu[129] Piaggio[130] Caterpillar Inc.[131]

Electric car manufacturers in India

Ajanta Group[132] Mahindra[133] Hero Electric[134] REVA Tara International[135] Tata[136]

Further reading
Kamala, T.N. & Doreswamy, A.G. (2007). Strategies for Enhancing Competitiveness of Indian Auto Component Industries [137]. Indian Institute of Management Kozhikode. Tiku, Pran (2008). Six Sizzling Markets: How to Profit from Investing in Brazil, Russia, India, China, South Korea, and Mexico. John Wiley & Sons. ISBN9780470178881.

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Automotive industry in India

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Automotive industry in India

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Automotive industry in India

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