Introduction:
In the early 60s and 70s, cars came mostly for two.
In your scooters you had a Lambrett or Vespa.
On motorcycles you had a bullet or java.
In cars, you had to choose between the Ambassador and Fiat.
In the trucks, it was either Ashok Leyland or Tata.
In tractors, it was between Swaraj and Mahindra.
This situation reflected India years ago. Economic reform and deregulation have transformed this scene. The automotive industry has written a new inspirational story. This story is about exciting multiplicity, unprecedented growth and a fun consumer experience - all this over the course of several years. India has already become one of the fastest growing automotive markets in the world. It is a tribute to leaders and managers in the industry and, equally, to policy makers. The automotive industry has the opportunity to go beyond this remarkable achievement. He stands on the threshold of a quantum leap.
The Indian automotive industry is experiencing technological change when each firm engages in changing its processes and technologies to maintain a competitive advantage and provide customers with optimized products and services. Starting from two-wheeled vehicles, trucks and tractors on multi-purpose vehicles, commercial vehicles and luxury cars, the Indian automobile industry has made great achievements in recent years.
“The opportunity looks in your face, it happens only once. If you miss this, you will not get it again. ”
On the canvas of the Indian economy, the auto industry maintains a high-ranking position. Due to deep forward and back links with several key segments of the economy, the automotive industry has a strong multiplier effect and can be a driving force for economic growth. A good transport system plays an important role in the rapid economic and industrial development of the country. The well-developed Indian automotive industry skillfully fulfills this catalytic role by producing a wide range of cars: cars, light, medium and heavy commercial vehicles, multi-purpose vehicles such as jeeps, scooters, motorcycles, mopeds, tricycles, tractors, etc. .
The automotive sector is one of the main sectors of the Indian economy, the prospect of which reflects the economic stability of the country. The continuous economic liberalization over the years by the government of India has led India to become one of the main business areas for many global automotive players. The automotive sector in India is growing at about 18 percent a year.
“The automotive industry is just a multiplier, a driver for work, investment, technology”,
The Indian automotive industry began its new journey since 1991, with the delicatisation of the sector and the subsequent discovery of 100 percent FDI through an automatic route. Since then, almost all global companies have built their facilities in India, producing cars from 2 million in 1991 to 9.7 million in 2006 (almost 7 percent of the global production of cars and 2.4 percent of the production of four-wheel vehicles).
The aggregate annual growth rate of the automotive industry from 2000–2001 to 2005–2006 was 17 percent. The total annual export growth rate for the period from 2000-01 to 2005-06 was 32.92 percent. The automobile industry is expected to reach more than 20 percent in 2006–07 and about 15 percent in 2007–2008. Exports are expected to increase by more than 20 percent over the same period.
In recent years, the automotive sector has contributed to India’s brilliant economic performance. With the Indian middle class earning a higher per capita income, more and more people are willing to own private vehicles, including cars and two-wheeled vehicles. Movement of goods and manned services stimulated the sale of medium and medium-sized commercial vehicles for passenger and freight traffic.
Side by side with the growth in sales of new cars, the automotive component sector witnessed great growth. Domestic consumption of auto components crossed 9,000 crore rupiah and the export of half the size of this figure.
FDI Eye Adventure - INDIA!
India is at the peak of a wave of foreign direct investment. FDI inflows to India tripled from $ 6 billion. United States in 2004-05 to $ 19 billion. The United States in 2006-07 and, as expected, in 2007–2008 will quadruple to $ 25 billion. USA. According to AT Kearney 2006 FDI Confidence Index, India is the second most attractive FDI destination after China, pushing the United States to the third position. It is believed that India will soon catch up with China. This can also occur as China seeks to cool the economy and its measures of protectionism, which overshadow the attractiveness of the Middle Kingdom. With rising wages and high land prices in the eastern regions, China may lose its advantage as a cheap manufacturing center. India seems like a natural choice.
India is a major manufacturer, especially electrical and electronic equipment, automobiles and auto parts. During the years 2000-2005 Of the total inflow of FDI, electrical and electronic (including computer software) and automobiles accounted for 13.7% and 8.4%, respectively.
In the service sectors, the leading players are the USA, Singapore and the United Kingdom. From 2000–2005, the total investment from these three countries was about 40 percent of FDI in the services sector. In cars, the key player is Japan. During 2000–2005, Japan accounted for about 41 percent of total FDI in automobiles, which significantly exceeded all of its competitors.
India’s huge domestic market and a large pool of technically qualified personnel were magnetism for foreign investors. Until now, renowned for knowledge-based industries, India has also become a powerhouse for regular production. Over the past three years, the manufacturing sector of the Industrial Production Index has increased annually by more than 9 percent.
Korean automakers believe that India is a better destination than China. Although China provides a larger car market, India offers the potential for higher growth. Obviously, growth in production and services and consumption growth make India one of the most important areas for FDI.
Automotive Mission Plan 2016
The bumper-bumper movement of the global car giants on the way to India finally forced the government to sit and take note. In an effort to attract large investments in this sector, the Ministry of Heavy Industry decided to draw up a 10-year mission plan to make India a global center for the automotive industry.
“The mission’s ten-year plan will also establish a“ fiscal stimulus roadmap ”,
The Government of India is developing an Automotive Mission Plan 2016, which aims to transform India into a global automotive hub. The idea is to develop an innovative action plan with the full participation of interested parties and implement it in a mission mode to solve problems arising in the growth of industry. As part of this auto-mission plan, the government also wants to provide players in this sector with equal conditions and set a predictable future growth direction so that manufacturers can make a more informed investment decision.
The main players in the automotive sector are:
about tata
about mahindra
o Ashok Leyland
about bajaj
o Hero Honda
o Daimler Chrysler
about suzuki
about ford
about fiat
about hyundai
General issues
about volvo
about yamaha
about mazda
Foreign companies in the Indian auto sector
Until the mid-1990s, India’s automobile industry consisted of only a few local companies with low capacity and outdated technology. However, after the sector was open to foreign direct investment in 1996, some of the global companies moved, and by 2002, Hyundai, Honda, Toyota, General Motors, Ford and Mitsubishi had established their manufacturing bases.
Over the past four to five years, the country has launched several domestic and foreign models of passenger cars, multi-purpose vehicles (MUV), commercial vehicles and two-wheeled vehicles and a significant increase in the production of all types of vehicles. In addition, thanks to its low-cost, high-quality production, India also an important outsourcing center for automotive components and vehicle design, competing with Thailand. The German automaker Volkswagen AG also wants to enter India.
It is expected that India will become a small automobile hub for the Japanese major Toyota. A car, hot hatch, such as the Swift or Getz, is likely to be exported to markets such as Brazil and other Asian countries. This global car is crucial for Toyota, which seeks to improve its sales in the BRIC markets (Brazil, Russia, India, China).
Two multinational automobile companies - Suzuki Motor Corporation from Japan and Hyundai Motor Company from Korea - indicated that their production facilities would be used as a global source for small cars. The pursuit of their own product development skills and a uniquely high concentration of small cars will affect the country's ability to become the center of search for subcompact cars.
A welcome feature of the changing automotive scene in India over the past five years is the new success and the confidence of domestic manufacturers. They are no longer afraid of competition from international car enthusiasts.
For example, today Indigo Tata Motor is the leader of a popular consumer category, and the Indica is neck and neck with Santro Hyundai in the race for the top slot in category B. Meanwhile, M & M's Scorpio has resisted the challenge from Qualis Toyota to lead the segment SUV.
Similarly, several Indian winners appeared on the motorcycle market - 150 and 180 cu. See pulsar from Bajaya and 110 cu. See Victor from the TVS stabilizer. The winners also received 93 cu. See bike from Bajaj and 110 cc Freedom bike from LML.
Obviously, Indian players have learned from past mistakes and developed skills to create cheaper cars using “suitable” technologies. For example, TVS paid a $ 100,000 overseas source to fine-tune home-made engines, rather than $ 1.5 million to import the entire engine. Similarly, M & M has adapted the available systems and off-the-shelf components from global suppliers to reduce costs and switch to aggressive pricing. True, Indian players still lack scale. Although economies of scale undoubtedly play an important role in the automotive sector, some Indian manufacturers relied on innovation, rather than scale, for competitive advantage. For example, Sundram Fasteners was able to achieve the feat of directly feeding General Motors radiator caps solely on the basis of product quality innovation. The industrial industry has equipped an order for the Toyota Kirloskar transmission plant in the face of fierce competition from transnational corporations. The cost of all the work turned out to be only part of the initial assessment.
As the automotive industry developed over the past decade, the automotive component industry has also developed rapidly and quickly reached global competitiveness in terms of both cost and quality.
According to industry observers, while the automotive market will grow in slow motion, the component industry is ready to take off. For it is one of the few industries where India has an excellent competitive advantage. International automotive companies such as Hyundai, Ford, Toyota and GM, which established their bases in India in the 1990s, convinced some of their overseas component suppliers to establish production facilities in India.
Consequently, the value of the cumulative release of the automotive component industry quickly rose to 30,640 rupees at the end of 2003-04. Only from 11,475 rupees in 1996-97. Foreign companies such as Delphi, which followed General Motors in 1995, and Visteon, which followed Ford Motors in 1998, soon realized a significant advantage in manufacturing components in India.
After finding out that the cost had dropped by about 30%, they began exploring the possibility of exporting these low-cost, high-quality components to their global factories and, thus, lowering total costs. It is not surprising that the export of industry registered a more than fourfold jump to 4.8 thousand Rupees in 2003–2004 from only 1.033 million Rupees in 1996–1997.
Car companies such as Maruti Udyog, Toyota, Hyundai, have now completed their plans to invest in some of the critical auto components. According to representatives of the Automotive Component Manufacturers Association of India (ACMA), automotive component manufacturers are expected to invest around 10,000 rupees over the next five years at a rate of 2000 rupees per year.
According to analysts, the automotive component industry may appear as the next success story after software, pharmaceuticals, BPO, and textiles. The size of the global automotive component industry is estimated at $ 1 trillion and will continue to grow. Against this background, the latest McKinsey report estimated that the sector could increase its exports to $ 25 billion. US 2015 with 1.1 billion dollars. United States in 2004.
Threat to a dream!
India’s expedition to become a global center for the auto industry can be seriously challenged due to its inability to defend its low-cost production base. A survey conducted by the study, KMPMG, shows that Indian manufacturers of automotive components are increasingly skeptical about maintaining an inexpensive base, because overhead costs, including labor costs and a complex tax regime, are constantly increasing.
The survey showed that many managers believe that the price advantage in India is rapidly declining, as labor costs are constantly increasing, and retaining employees is becoming increasingly difficult. The increased presence of global auto companies in the country has been identified as one of the reasons for the high erosion rate.
Indian automobile enterprises will thrive only if they increase investment in automation. In the long run, the price advantage will be maintained only if Indian capital can be used to develop low-cost automation in the manufacturing industry. This is a way to keep our costs low.
Global car enthusiasts are also cynical about India’s low-cost production base. The taxation of India remains a great disadvantage. This is not about tax rates, but about unnecessary complexity. But some companies also believe that there are opportunities to reduce the cost of doing business.
Despite this, there are opportunities to use lower costs across the board. It is true that labor costs are definitely increasing, but they still account for five percent of total operating costs. Labor costs can be further reduced if companies manage to reduce other costs, for example, to reduce energy costs. Low cost base can never last long. The company said that the Indian industry has so far relied on a very labor-intensive model, but now it will have to switch to a more capital-intensive model.
