http://en.wikipedia.

org/wiki/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.[2] 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] 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.[5]

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.[6][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][15][16]

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.[21]

Automobiles Last Updated: November 2010

http://www.ibef.org/artdispview.aspx?in=4&art_id=27285&cat_id=114&page=1

Introduction:

The growth of the Indian middle class along with the growth of the economy over the past
few years has attracted global auto majors to the Indian market. India provides trained
manpower at competitive costs making the country a favoured global manufacturing hub. The
world's major car manufacturers continue to invest in India and now the supplier segment is
also attracting private equity (PE) investments.

The government has claimed that the country has become the seventh largest vehicle
producing nation in the world, six years ahead of the set target. According to Mr B S Meena,
Secretary, Ministry of Heavy Industry, "When we were making the Auto Mission Plan
(AMP) in 2006, we had projected India to become the seventh largest vehicle producing
country in the world by 2016. We have already achieved this milestone good six years ahead
of the set target."

According to a study by global consultancy firm Ernst & Young, the Indian market will clock
the fastest compound annual growth rate between 2009 and 2020, more than double that of
China and the triad of North America, Europe and Japan. India's CAGR between 2009 and
2020 is expected to be 14 per cent compared with China's 6 per cent, other emerging markets'
6 per cent (which includes BRIC nations) and the triad's four per cent.

Investments:

India has emerged as one of the favourite investment destinations for automotive
manufacturers in recent times.

 Maruti Suzuki India Ltd (MSIL) has announced an investment of US$ 411.45 million
for setting up its third plant at Manesar in order to capitalise on the rapid growth of
the Indian auto industry. This new production line–Maruti's sixth overall would have
250,000 units annual capacity.
 Volvo-Eicher Commercial Vehicles (VECV) has announced an investment of US$
61.51 million for a new engine plant at its existing facility at Pithampur, Madhya
Pradesh. With this, India will now become a global manufacturing hub for Volvo's
new medium-duty engine platform, with the only other factory for the engine type
being present in Japan.
 Toyota Kirloskar, which focused mainly in metros and urban areas, has drawn up
plans to sell 40 per cent of its cars in the rural markets. By end of 2010, the company
plans to have 150 dealers across the country and will invest US$ 698.46 million in a
second plant in Bidadi.
 Toyoto also plans to invest US$ 107 million to make engines and gearboxes for
Toyota's new small car, Etios that is expected to be launched by year-end.
 India Yamaha Motor Limited is also planning to tap the rural market, which currently
accounts for around 15 per cent of its overall sale. The company has launched a new
bike YBR 110 that will target the rural markets.
 Mercedes Benz has met its single largest order—of 150 cars worth US$ 14.7 million
—from the small industrial town of Aurangabad, Maharashtra.
 The Renault-Nissan alliance and Bajaj Auto have signed a memorandum of
understanding for developing a low-cost car. According to the MoU, the design,
 engineering, manufacturing and supply base expertise to create the product will be
executed by Bajaj with the support of the Renault-Nissan alliance.
 Honda Siel Cars India (HSCI) has announced an investment of US$ 53.55 million for
the expansion of its power train facility at Tapukara, Rajasthan. Scheduled to be
completed by end-2010, the plant would become a low-cost production base for its
new small car.
 Indo-Russian commercial vehicle joint venture (JV) Kamaz Vectra Motors plans to
more than double its annual capacity to 12,000 units at its Hosur plant by 2012 to
capture the fast-growing market in India.
 Ashok Leyland and Japanese car maker Nissan Motor Co Ltd have announced the
launch of three light commercial vehicles (LCVs) from 2011 through 2013. The auto
makers also confirmed to be in talks to create a small car for the Indian market within
the US$ 2,000 - US$ 6,000 price range.
 British luxury brand Jaguar Land Rover (JLR) plans to increase presence in India and
will tap parent Tata Motors for assistance in areas like logistics and service support.
 BMW, the luxury car maker, is planning to infuse US$ 15.76 million in its Indian
operations. Andreas Schaaf, President, BMW India, said that the company had
invested US$ 24.77 million till September 2010 and this would be increased to US$
40.53 million by the end of 2012.
 Luxury carmaker Mercedes-Benz India will set up a new facility for building of city
bus bodies at its Chakan plant in Pune. The new unit will become operational by mid-
2011 and will have a capacity of 700 units a year.

Domestic Market/ Sales:

 According to data released by the Society of Indian Automobile Manufacturers

(SIAM), the passenger vehicles segment during April-September 2010 grew at 32.91
per cent over same period last year. Passenger cars grew by 33.58 per cent, utility
vehicles grew by 20.69 per cent and multi-purpose vehicles grew by 49.32 per cent
during this period.
 The overall commercial vehicles segment registered a growth of 41.59 per cent during
the first half of 2010-11, as compared to the same period last year. While medium and
heavy commercial vehicles registered growth of 61.59 per cent, light commercial
vehicles grew at 26.90 per cent.
 Two wheelers registered a growth of 25.86 per cent during April-September 2010.
Mopeds, scooters and motorcycles grew by 23.13 per cent, 44.95 per cent and 22.52
per cent, respectively.

Road Ahead:

Global auto companies are investing to tap the growing demand in India as investment
spending and the government's social programmes raise incomes in smaller cities and rural
areas too. "The Indian automobile industry is geared up to invest up to US$ 17.12 billion in
fresh capacity in the next four years," Vishnu Mathur, Director-General, SIAM said. He
further stated, "The components industry will also invest US$ 12 billion up to the end of the
Automotive Mission Plan."

Car and motorcycle sales in India are setting records with rising incomes, cheap lending by
banks and launch of new models such as Volkswagen's Polo and Fiat's Linea. Car
manufacturing capacity is set to rise to 5.7 million units by 2015, according to consultants
Ernst & Young.

Further, India aims to become the small car hub of the world by dethroning Japan, the biggest
maker of compact cars, a majority of which is consumed domestically. Last year, it had
pipped Brazil to become the second-largest producer of such cars. While Japan produced 3.4
million small cars between January and December in 2009, India manufactured 1.48 million
units in the same period.

According to the annual forecast of the SIAM, passenger vehicle sales in the country will be
21,96,791 units in 2010-11 as compared to 19,49,248 units in 2009-10.

While two-wheeler sales are expected to be up 9-10 per cent at 10,287,837 units from
9,368,230 units in 2009-10, commercial vehicle sales in India will grow 17-18 per cent at
6,21,681 units vis-à-vis 5,31,395 units last financial year. Sales of three-wheelers are
expected to go up 7-8 per cent at 4,73,693 units in the current financial year as against
4,40,368 units in 2009-10.

However, with demand outgrowing the supply in the market, the overall market growth for
2010-11 is most likely to exceed SIAM's initial prediction of 10-14 per cent.

India's largest carmaker Maruti fights falling market share

http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/Indias-largest-
carmaker-Maruti-fights-falling-market-share/articleshow/6193776.cms

MUMBAI: There is a lot of action at Maruti Suzuki head office in South Delhi as top
officials are holding a series of meetings and brainstorming sessions to find a way to check a
steady slide in its market share.

The share of the country’s largest carmaker slipped below 50% for the first time in several
years when it reported a 47% market share for the January-June period. The credit for this
goes to a slew of cars that stormed the market at highly competitive prices from the world’s
cheapest car Tata Nano to Ford Figo, GM Beat and Hyundai i20.

With India emerging one of the hottest destinations for global carmakers, Maruti has its task
cut out.

The company is already on its feet, or rather wheels, to tackle the onslaught, says R C
Bhargava, chairman of Maruti Suzuki. “The lower cost of ownership of our vehicles will
offset competitors’ aggressive pricing tactics.”

It has swiftly installed some manual lines, added extra shifts in factories and made the paint
shop operate 24/7 to keep pace with the demand and reduce waiting period for delivery of its
popular models.

Maruti has also set aside close to Rs 3,000 crore to increase its manufacturing capacity by
200,000 units to 1.2 million cars by 2011 and build a new research and development facility
at Rohtak, which will be Suzuki’s R&D hub for Asia operations.

Still, experts believe the market leader will not be able to keep selling every second car in the
country for long.
“Maruti’s volumes will grow but its market share may come under pressure,” says Abdul
Majeed, auto practice leader at PricewaterhouseCoopers (PwC).

The biggest reason is India is one place where every carmaker wants to be. They all have set
their sights on the small car segment that accounts for about 80% of the Indian car market.
Many new entrants in this segment such as General Motors’ Beat, Hyundai i20, Ford Figo
and Volkswagen Polo are attracting consumers through aggressive pricing and promotional
offers.

Nissan Micra and Toyota Etios will join the race later this year. Market watchers say the
Nissan Micra — priced aggressively at Rs 4-5.3 lakh, on par with Maruti Swift — has
already clocked 2,000 pre-bookings. Honda will launch a new small car next year and
Hyundai is working on a 800cc car.

To add to all this, Tata Motors’ new Sanand plant in Gujarat will soon start rolling out more
than 20,000 Tata Nanos every month and ramp up its capacity further.

Clearly, Maruti has a tough race ahead.

But then, although the leading carmaker may not be able to hold on to its market share, it is
widely expected to retain its number one position for a long time yet.

In 1998, industry watchers had predicted doomsday for Maruti when Korean car major
Hyundai launched its compact car Santro. More than a decade later, Maruti still holds about
60% share of the small car segment.

“Maruti Suzuki has a deep understanding of the Indian consumer’s psyche, it has a terrific
distribution and an enviable sales network built over the years,” says Jagdish Khattar, former
CEO of Maruti Suzuki who now heads car servicing venture Carnation Auto.

http://findarticles.com/p/articles/mi_m0KJI/is_3_118/ai_n16118939/

Center of Gravity Shifting in India’s Small-Car Market

By Sudhakar Shah
WardsAuto.com, Jan 6, 2010 9:00 AM      

http://wardsauto.com/ar/gravity_shifting_india_100106/
MUMBAI – India’s 10th New Delhi Auto Expo, which opened Tuesday, is shaping up to be
a battleground for design and innovation vs. a war of wits and marketing, as global auto
makers debut the latest in small cars and new engine technologies.

Japanese brands, for example, are pitting the refinement and reliability of their passenger
vehicles against the precision engineering and drivability of the German car makers. But they
also are unveiling low-cost subcompacts designed with India’s price-sensitive market in
mind.

ADVERTISEMENT

Every auto maker in India is tussling for market share, as evidenced by the 20 new and
existing small compacts and smaller hatchbacks displayed at the show. However, there’s also
a full-scale race among luxury vehicles, including small cars such as the Volkswagen New
Beetle.

The range of product introductions at the Auto Expo swings from the new sporty Chevrolet
Beat minicar priced at less than $8,500 to the Mercedes GL350 CDI SUV that will sell for
$150,000.

One of four key emerging markets, India is Asia’s fourth-largest vehicle market and among
the fastest growing, with a goal of reaching 3 million total vehicle sales by 2015, according to
a government forecast. Industry sales in the first 11 months of 2009 included 1,310,665 cars
and 582,293 light trucks, Ward’s data shows.

The game starts with Advantage Japan, which currently holds a 47.8% share of the Indian
market. Maruti Suzuki India Ltd. is at the top with a 42.4% share, followed by Toyota
Kirloskar Motor Ltd. and Honda Siel Cars India Ltd. Nissan Motor India Ltd. now arrives,
bringing aggressive designs for low-cost, small and electric cars.

Maruti Suzuki’s market lead can be credited to its research and development base in India,
providing the capability and understanding to build cars and make design alterations with a
short lead time in order to suit Indian preferences.
But the Auto Expo already is revealing the
challenges the auto maker is facing from its rivals.
Among them is General Motors India Pvt. Ltd.,
which recently joined forces with the Reva Electric
Car Co. in Bangalore to develop low-cost electric
vehicles for India and some export markets.

GM India also is working on low-emissions,

alternative-fueled vehicles, powered by liquefied
petroleum gas and compressed natural gas, as well GM India’s sporty Chevy Beat minicar one
as researching biofuels.
of many new small cars unveiled at Auto
Expo.
The auto maker produces seven cars under the
Chevrolet brand in India at two factories and is
planning a $500,000 expansion that includes a car
plant and engine and transmission facility.

Parent General Motors Co. says it expects to sell 100,000 vehicles in India this year. The auto
maker sold 60,845 cars and light trucks in the country in the first 11 months of 2009,
according to Ward’s data.
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Stepping up its presence in India is Volkswagen AG, which
recently took a 19.9% stake in Suzuki Motor Corp. and is New Delhi Auto Expo to
looking to India for future small cars. The German brand Feature Low-Cost
reportedly is aiming at a 10% share of the Indian market.
Subcompacts, EVs
VW has an added advantage of 10 years of Indian experience
through its Skoda Auto India Ltd. subsidiary. Further, India’s VW, Suzuki Agree to
luxury-car market is small in size but large in profit margin, Global Alliance That
giving VW an inside track with its Audi marque and fellowship Could Threaten Toyota’s
with Porsche luxury cars. World Dominance

Plus, German car makers all have small common-rail, direct- Maruti Suzuki Sharpens
injection diesel engines to offer, whereas Japanese car Competitive Edge in
companies in India are dependent on Fiat Automobiles SpA’s
India
small multi-jet diesels.

All this has Maruti Suzuki worried. “We are aware that India Ford Unveils New Small
now isn’t in a situation where we can be the sole winner,” Car for India; Exports
company spokesman Hideki Taguchi is quoted as saying. Even Planned
R.C. Bhargava, Maruti Suzuki chairman, concedes: “It is going
to be a tough battle.”

Maruti Suzuki currently offers seven small-car models with 30 variants that it believes
provide buyers ample choice. The auto maker has said it is aiming to sell 1 million vehicles
by the conclusion of the fiscal year ending March 31.

But these soon will be challenged by the VW Polo, upcoming Ford Figo, Toyota Etios
unveiled at the Expo and Honda Motor Co. Ltd.’s unnamed new global compact car to be
introduced in India. Honda also recently began selling its compact Jazz (Fit) hatchback in
India.

Fiat India already has three small cars here. And GM India will be bringing a compact car
from its new joint venture with Shanghai Automotive Industry Corp.

The booming small-car segment also includes offerings from powerhouse Hyundai Motor
India Ltd. and Tata Motors Ltd. Interestingly, the car that started the rush to low-cost
subcompacts among global auto makers, the Tata Nano, has yet to make its impact felt in the
Indian market.

© 2010 Penton Media, Inc. All rights reserved.

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