AUTOMOBILE INDUSTRY IN INDIA

     

                     AUTOMOBILE INDUSTRY IN INDIA

The automotive industry in India is one of the largest in the world with an annual production of 23.37 million vehicles in FY 2014-15, following a growth of 8.68 per cent over the last year. The automobile industry accounts for 7.1 per cent of the country's gross domestic product (GDP). The Two Wheelers segment, with 81 per cent market share, is the leader of the Indian Automobile market, owing to a growing middle class and a young population. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The overall Passenger Vehicle (PV) segment has 13 per cent market share.

India is also a prominent auto exporter and has strong export growth expectations for the near future. In FY 2014-15, automobile exports grew by 15 per cent over the last year. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.

Market Size

The industry produced a total 14.25 million vehicles including PVs, commercial vehicles (CVs), three wheelers (3W) and 2W in April–October 2015, as against 13.83 in April–October 2014, registering a marginal growth of 3.07 per cent, year-to-year.

The sales of PVs grew by 8.51 per cent in April–October 2015 over the same period in the previous year. The overall CVs segment registered a growth of 8.02 per cent in April–October 2015 as compared to same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) registered very strong growth of 32.3 per cent while sales of Light Commercial Vehicles (LCVs) declined by 5.24 per cent during April–October 2015, year-to-year.

In April–October 2015, overall automobile exports grew by 5.78 per cent. PVs, CVs, 3Ws and 2Ws registered growth of 6.34 per cent, 17.95 per cent, 18.59 per cent and 3.22 per cent, respectively, in April–October 2015 over April–October 2014.

Investments

In order to keep up with the growing demand, several auto makers have started investing heavily in various segments of the industry during the last few months. The industry has attracted foreign direct investment (FDI) worth US$13.48 billion during the period April 2000 to June 2015, according to data released by Department of Industrial Policy and Promotion (DIPP).

Some of the major investments and developments in the automobile sector in India are as follows:

Global auto maker Ford plans to manufacture in India two families of engines by 2017, a 2.2 litre diesel engine code-named Panther, and a 1.2 litre petrol engine code-named Dragon, which are expected to power 270,000 Ford vehicles globally.

The world’s largest air bag suppliers Autoliv Inc, Takata Corp, TRW Automotive Inc and Toyoda Gosei Co are setting up plants and increasing capacity in India.

General Motors plans to invest US$1 billion in India by 2020, mainly to increase the capacity at the Talegaon plant in Maharashtra from 130,000 units a year to 220,000 by 2025.

US-based car maker Chrysler has planned to invest Rs 3,500 crore (US$525 million) in Maharashtra, to manufacture Jeep Grand Cherokee model.

Mercedes Benz has decided to manufacture the GLA entry SUV in India. The company has doubled its India assembly capacity to 20,000 units per annum.

Germany-based luxury car maker Bayerische Motoren Werke AG’s (BMW) local unit has announced to procure components from seven India-based auto parts makers.

Mahindra Two Wheelers Limited (MTWL) acquired 51 per cent shares in France-based Peugeot Motorcycles (PMTC).

Government Initiatives

The Government of India encourages foreign investment in the automobile sector and allows 100 per cent FDI under the automatic route.

Some of the major initiatives taken by the Government of India are:

The Government of India aims to make automobile manufacturing the main driver of "Make in India" initiative, as it expects the passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.

In the Union budget of 2015-16, the Government has announced plans to provide credit of Rs 850,000 crore (US$127.5 billion) to farmers, which is expected to boost sales in the tractors segment.

The government plans to promote eco-friendly cars in the country—i.e. CNG-based vehicles, hybrid vehicles, and electric vehicles—and also to make mandatory 5 per cent ethanol blending in petrol.

The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020, to encourage the progressive introduction of reliable, affordable, and efficient electric and hybrid vehicles into the country.

The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector

History

A pre-Independence car showroom in Secunderabad

The Hindustan Ambassador dominated India's automotive market from the 1960s until the mid-80s

In 1897, the first car ran on an Indian road. Through the 1930s, cars were only imported, and in very small numbers.

An embryonic automotive industry emerged in India in the 1940s. Hindustan Motors was launched in 1942, long-time competitor Premier in 1944, building GM and Fiat products respectively.[4] Mahindra & Mahindra was established by two brothers in 1945, and began assembly of Jeep CJ-3A utility vehicles. Following 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. In 1953, an import substitution programme was launched, and the import of fully built-up cars began to be restricted.

Restrictions under the license raj

However, growth was relatively slow in the 1950s and 1960s, due to nationalisation and the license raj, which hampered the Indian private sector. After 1970, with restrictions on the import of vehicles set, the automotive industry started to grow; but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury item. In the 1970s, price controls were finally lifted, inserting a competitive element into the automobile market. However, by the 1980s, the automobile market was still dominated by Hindustan and Premier, who sold superannuated products in fairly limited numbers. During the eighties, a few competitors began to arrive on the scene.

In 1986, to promote the auto industry, the government established the Delhi Auto Expo. The 1986 Expo was a showcase for how the Indian automotive industry was absorbing new technologies, promoting indigenous research and development, and adapting these technologies for the rugged conditions of India. The nine-day show was attended by then Prime Minister Rajiv Gandhi.

Liberalisation

Eventually multinational automakers, such as, Suzuki and Toyota of Japan and Hyundai of South Korea, were allowed to invest in the Indian market, furthering the establishment of an automotive industry in India. Maruti Suzuki was the first, and the most successful of these new entries, and in part the result of government policies to promote the automotive industry beginning in the 1980s.As India began to liberalise its automobile market in 1991, a number of foreign firms also initiated joint ventures with existing Indian companies. The variety of options available to the consumer began to multiply in the nineties, whereas before there had usually only been one option in each price class. By 2000, there were 12 large automotive companies in the Indian market, most of them offshoots of global companies.

The Premier Padmini was the Ambassador's only true competitor

Slow export growth

Exports were slow to grow. Sales of small numbers of vehicles to tertiary markets and neighbouring countries began early, and in 1987 Maruti Suzuki shipped 480 cars to Europe (Hungary). After some growth in the mid-nineties, exports once again began to drop as the outmoded platforms provided to Indian manufacturers by multinationals were not competitive. This was not to last, and today India manufactures low-priced cars for markets across the globe. As of 18 March 2013, global brands such as Proton Holdings, PSA Group, Kia, Mazda, Chrysler, Dodge and Geely Holding Group were shelving plans for India due to the competitiveness of the market, as well as the global economic crisis.

Emission norms

In 2000, in tune with international standards to reduce vehicular pollution, the central government unveiled standards titled "India 2000", with later, upgraded guidelines to be known as Bharat stages. These standards are quite similar to the stringent European standards, and have been implemented in a phased manner, with the latest upgrade being implemented in 13 cities and, later, in the rest of the nation. Delhi (NCR), Mumbai, Kolkata, Chennai, Bangalore, 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.

Local manufacture encouraged

India levies an import tax of 125% on electric cars, while the import tax on components such as gearboxes, airbags, drive axles, is 10%. Therefore, the taxes encourage cars to be assembled in India rather than be imported as completely built units

Manufacturing facilities

The majority of India's car manufacturing industry is evenly divided into three "clusters". Around Chennai is the southernmost and largest, with a 35% revenue share, accounting for 60% of the country's automotive exports, and home of the India operations of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors, Daimler, Caparo, Mini, and Datsun.

Near Mumbai, Maharashtra, along the Chakan corridor near Pune, is the western cluster, with a 33% share of the market. Audi, Volkswagen, and Skoda are located in Aurangabad. Mahindra and Mahindra has an SUV and engine assembly plant at Nashik. General Motors, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat, and Force Motors have assembly plants in the area.

The northern cluster is around the National Capital Region, and contributes 32%. Gurgaon and Manesar, in Haryana, are where the country's largest car manufacturer, Maruti Suzuki, is based.

An emerging cluster is the state of Gujarat, with a manufacturing facility of General Motors in Halol, and a facility for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki, and Peugeot-Citroen plants are also planned for Gujarat.

Kolkata with Hindustan Motors (inactive), Noida with Honda, and Bengaluru with Toyota are other automotive manufacturing regions around the country.

Gujarat

Passenger vehicles

General Motors India Private Limited

Chevrolet Sales India Private Limited – Halol

Tata Motors – Sanand

Commercial vehicles

Asia Motor Works AMW – Bhuj

Haryana

Two wheelers

Harley-Davidson India, Gurgaon 

Hero MotoCorp – Dharuhera, Gurgaon

Honda Motorcycle & Scooter India – Manesar

India Yamaha Motor – Faridabad,Manesar

Suzuki – Gurgaon

Passenger vehicles

Maruti Suzuki – Gurgaon, Manesar

Himachal Pradesh

Two wheelers

TVS Motors – Nalagarh

Passenger vehicles

ICML motors – Amb

Commercial vehicles

TAFE Tractors – Parwanoo

Jharkhand

Commercial vehicles

Tata Motors – Jamshedpur

Karnataka

Two wheelers

TVS Motor – Mysuru

Honda Motorcycle & Scooter India Pvt. Ltd. - Narsapura

Passenger vehicles

Mahindra REVA Electric Vehicles – Bengaluru

Toyota Kirloskar Motor Private Limited – Bidadi

Commercial vehicles

Bharat Earth Movers - Bengaluru

Scania Commercial Vehicles India Private Limited – Bengaluru

TAFE Tractors – Doddaballapur

Tata Motors – Dharwad

Bharat Earth Movers - Mysuru

Volvo India

Volvo Buses India – Hosakote

Volvo Trucks India – Hosakote

Volvo Construction Equipment India – Hosakote

Kerala

Commercial vehicles

Bharat Earth Movers Defense Products - produces Tatra Trucks 12x12, 10x10,8x8, 6x6, 4x4 & Variants

Kerala Automobiles Limited

Madhya Pradesh

Two wheelers

Mahindra & Mahindra – Pithampur

Commercial vehicles

Eicher Motors – Pithampur

Hindustan Motors – Pithampur

Force Motors Private Limited – Pithampur

TAFE Tractors – Mandideep

John Deere Tractors – Dewas

CASE Construction Equipment - Pithampur

Maharashtra

Two wheelers

Bajaj Auto – Chakan(Pune), Waluj Aurangabad

KTM Sportmotorcycles – Chakan(Pune)

Vespa Scooters – Baramati (Pune)

Kinetic Engineering – Pune, Ahmednagar 

Passenger vehicles

Mahindra & Mahindra Automotive Division – Nashik, Chakan(Pune)

Ssangyong Motor Company – Chakan(Pune)

Tata Motors Limited

Tata Motors – Pimpri Chinchwad(Pune)

Jaguar Cars and Land Rover – Pune

Mercedes-Benz Passenger Cars – Chakan(Pune)

Fiat Automobiles – Ranjangaon (Pune)

General Motors India – Chakan(Pune)

Volkswagen Group Sales India Private Limited

Volkswagen – Chakan(Pune)

Audi AG – Aurangabad

Škoda Auto – Aurangabad

Chinkara Motors – Karlekhind Alibag

Premier Automobiles Limited – Pimpri Chinchwad(Pune)

Commercial vehicles

Ashok Leyland – Bhandara

Bajaj Auto – Waluj Aurangabad

Force Motors – Pune

Mahindra Navistar – Chakan(Pune)

MAN Trucks India – Akurdi (Pune)

Piaggio Vehicles – Baramati (Pune)

Premier Automobiles Limited – Pimpri Chinchwad(Pune)

Punjab

Commercial vehicles

SML Isuzu Limited – Nawanshahar (originally a Swaraj Mazda plant)

Rajasthan

 Two Wheelers

Honda Motorcycle & Scooter India – Tapukara

Passenger vehicles

Honda Cars India Ltd. – Tapukara

Commercial vehicles

Ashok Leyland – Alwar

TAFE Tractors – Alwar

Tamil NadU

Two wheelers

TVS Motor – Hosur

Royal Enfield – Chennai

India Yamaha Motor – Oragadam

Passenger vehicles

BMW India – Chengalpattu

Ford India Private Limited – Maraimalai Nagar

Hyundai Motor India Limited – Sriperumbudur

Mitsubishi – Tiruvallur

Renault Nissan Automotive India Private Limited

Nissan Motor India Private Limited – Oragadam

Renault India Private Limited – Oragadam

Commercial vehicles

Ashok Leyland – Ennore, Hosur

BharatBenz – Oragadam

Kamaz Vectra Motors – Hosur

SAME Deutz-Fahr Tractors – Ranipet, Vellore

TAFE Tractors – Chennai

TVS Motors – Hosur

Uttar Pradesh

Two wheelers

India Yamaha Motor – Greater Noida

LML – Kanpur

Passenger vehicles

Honda Cars India Ltd. – Greater Noida

J.S. Auto (P) LTD. – Kanpur

Commercial vehicles

Tata Motors – Lucknow

Uttarakhand

Commercial vehicles

Ashok Leyland – Pantnagar

Tata Motors – Pantnagar

Mahindra & Mahindra – Haridwar

Hero MotoCorp – Haridwar

Bajaj Auto – Pantnagar

West Bengal

Passenger vehicles

Hindustan Motors Limited - Kolkata (Inactive)