Automotive Markets

The favorable Indian market conditions are acting as a catalyst for luxury and premium carmakers, which are receiving impetus from new launches. The top-end carmakers have posted double-digit growth for the quarter ended June 30, 2013, with firms like Honda at 45 per cent and Audio recording 28. 8 per cent, besides others. India is emerging as an export hub for sports utility vehicles (Subs). Global automobile majors are looking to leverage Indian’s cost-competitive manufacturing practices and are assessing opportunities to export Subs to Europe, South Africa and

Southeast Asia too. India is also one of the key markets for hybrid and electric medium-heavy-duty trucks and buses. Ford Motor Company is staking big on Asia- Pacific (OPAC) markets, especially India and China. “Ford will export Fig and Spaceports models out of India. The Indian plants would support the market here, as well as other global markets,” said Mr.. Alan Manually, Chief Executive Officer, Ford. Key Statistics The production of passenger vehicles in India was recorded at 3. 3 million in 2012-13 and is expected to grow at a compound annual growth rate (CARR) of 13 per cent ruing 2012-2021, as per data published by Automotive Component Manufacturers Association of India (ACM). Passenger car sales stood at 1. 89 million units in 2012-13. Additionally, share of luxury cars to the total passenger car market of India is expected to increase to four per cent by 2020. The total number of passenger cars in India is likely to touch around 8 million units by 2020, as per Mr.. Boris Fit, Director, Sales and Network Development, Mercedes-Benz India.

The industry produced 1. 74 million vehicles in May 2013. The export of passenger vehicles and three- wheelers ere by 7. 34 percent and 26. 53 percent respectively during the April-May 2013, as per data released by Society of Indian Automobile Manufacturers’ (SIAM). Furthermore, the amount of cumulative FED inflow into the Indian automobile industry during April 2000 to April 2013 was worth IIS$ 8. 32 million, amounting to 4 per cent of the total FED inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIP), Ministry of Commerce.

Major Developments & Investments * Ionians Motor India Pet Ltd is expecting to sell over 60 per cent more units this ear on the back of the launch of its upgraded small car – Ionians Micro * Daimler India Commercial Vehicles (DISC) exported its first lot of 64 Fuss trucks manufactured at its Aerogram plant in Achaean * Maidenhair USA, a subsidiary of Maidenhair and Maidenhair (M&M), will set up an assembly and distribution centre, expanding one of the four tractor facilities in North America, by January 2014 * The Japan- based automobile manufacturer Issue Motors’ local subsidiary Issue Motors India has entered into an agreement with Hindustan Motors (HEM) for contract manufacturing of Issue Subs and pickup trucks * A year after introducing the popular ‘MINI’ range of cars in India, luxury car maker BMW has started local production of ‘MINI Countryman’ at its facility in Achaean * New Holland Fiat India plans to invest RSI 1,100 core (IIS$ 184. 56 million) to set up a new Greenfield plant in the next three years * Hero Motorcar has bought a 49. 2 per cent stake in its US- based technology partner Erik Bubble Racing (BEER) for IIS$ 25 million. This is Hero Motocross’s first-ever equity purchase in an overseas company. Also, Hero Motorcar has entered into the African continent with launch of its brand and products in Kenya, where it has also set up an assembly unit. The company has also partnered with Race East Africa to sell its two-wheelers in the country * Daimler is developing its Indian commercial vehicle operations as an export hub.

Daimler India Commercial Vehicles (DISC) will export locally assembled trucks from the conglomerate’s Mediumistic Fuss range in 15 markets in Asia and Africa With India becoming a magnet for car makers, Koch in particular has emerged as Indian’s strongest growing market for luxury car brands like BMW, Audio, Mercedes and Jaguar Land Rover on back of rising value of spices and rubber and ever-increasing inflows from non-resident Israelites. Kraal now accounts for 10 per cent of Indian’s luxury car sales. Government Initiatives The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr.. Vertebra Molly, Union Minister for Petroleum and Natural Gas, Government of India. The Union Budget 2013-14 announced by Mr.. P Switchboard, the Union Finance Minister, Government of India, in the Parliament on February 28, 2013, had a few add-ones for the industry.

The analysis by Dolomite on the Union Budget highlighted the following: The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended Upton March 31, 2015 * The basic customs duty (BCC) on imported luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels was increased. The duty was raised from 75 percent to 100 percent on Cars / motor vehicles (irrespective of engine capacity) with CIFS value more than US$ 40,000; from 60 percent to 75 percent on motorcycles with engine capacity of chic or more and on yachts and similar vessels from 10 percent to 25 percent *

In addition, an increase in excise duty from 27 to 30 per cent has been allowed for Subs with engine capacity exceeding 1 ,500 c, while excise duty was decreased from 80 to 72 per cent, in case of Subs registered solely for taxi purposes * An exemption from BCC on lithium ion automotive battery for manufacture of lithium ion battery packs for supply to manufacturers of hybrid and electric vehicles * The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14 per cent to 13 per cent Moreover, the Government of India allows 100 per cent foreign direct investment (FED) in the automotive industry through automatic route.

The Government also plans to accelerate the supply of electric vehicles over the next eight years. It is expected that there will be a demand for 5-7 million electricity- operated vehicles by 2020. The contribution of automotive sector in the gross domestic product (GAP) is expected to double, reaching a turnover worth IIS$ 145 billion in 2016, with special focus on export of small cars, MI-Jobs, two ; three wheelers and auto components, as per the Automotive Mission Plan (AMP) 2006-2016. Road Ahead Global and Indian manufacturers are focusing their efforts to develop innovative products, technologies and supply chains in the industry. Car makers are launching a body SIAM expects the launches to be able to brighten the market.

Lastly, the vision of AMP 2006-2016 sees India, “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of IIS$ 145 billion; accounting for more than 10 per cent of the GAP and providing additional employment to 25 million people by 2016. ” Exchange Rate Used: INNER 1 = US 0. 01677 as on July 12, 2013 The Indian auto component industry is expected to reach a turnover worth US$ 113 billion by 2020-21 from IIS$ 43. 4 billion in 2011-12, according to a Automotive Component Manufactures Association (ACM) report titled, ‘Auto Component Industry in India: Growing Capabilities & Strengths’. The exports from the industry are expected to grow at a compound annual growth rate (CARR) of 17 per cent during 2012-21, the ACM report highlighted.

India has emerged as one of the world’s most competitive tare markets due to vast availability of raw material (natural rubber) and ultramodern production facilities. The radial tare market is expected to reach RSI 393 billion (IIS$ 7. 33 billion) by FYI 2015 growing at a CARR of more than 21 per cent during FYI 2011-FYI 2015. The automotive plants of global automakers in India rank among the top across the world in terms of their productivity and quality. Top auto multinational companies (Mans) like Hounded, Toyota and Suzuki rank their Indian production facilities right on top of their global pecking order. The Indian automobile and auto components industry can be expected to surpass China’s growth path by 2021, according to a research report by Esposito Santos Securities.

Market Structure The tare production in India is anticipated to reach 191 million units by the end of FYI 2016, according to a RONDOS research report titled, ‘Indian Tare Industry Forecast to 2015’. The manufacturers are expected to invest huge amount into the industry over the next few years, with a major proportion of this investment directed towards the radial tare capacity expansion. In addition, with a significant increase in the number of CNN vehicles, the CNN vehicle market is witnessing a strong growth pattern. According to a RONDOS report titled, “India CNN Vehicle Market Analysis”, the CNN kit rake is expected to reach around INNER 30 Billion in FYI 2014, growing at a CARR of around 22 per cent during FYI 2011-2014.

India: The Global Auto Hub The amount of cumulative foreign direct investment (FED) inflow into the automobile industry during April 2000 to January 2013 was worth IIS$ 8,061 million, accounting to 4 per cent of the total FED inflows (in terms of IIS$), as per data published by Department of Industrial Policy and Promotion (DIP), Ministry of Commerce. A delegation of Japanese auto component companies visited Tamil Undue (TN) to explore investment opportunities and scout for partnerships with Indian auto component Akers. The State houses over 300 Japanese companies and these tier 1 companies would need support from tier 2 component makers and other micro, small and medium enterprise (MSIE) suppliers. Apollo Tires plans to expand its reach in Association for South East Asian Nations (SEAN). The company will set up a subsidiary to explore market opportunities in the region.

Honda Cars India Ltd (HCI) plans to export diesel engine components to Asian and European markets from India. Key Developments and Investments reasonably priced talented workforce and stable outlook for the industry has made India a global hub for the international manufacturers to set up their facilities in the country. The auto components manufacturers are also reaping the benefits. * Federal-Mogul has announced the launch of Overdo commercial-vehicle (C.V.) brake lining in the Indian market. The product is being manufactured at the company’s pking new plant in Achaean * Alter will set up an automotive testing facility at its labs in Achaean, Tamil Undue.

The facility will help automobile manufacturers in and around Achaean to outsource testing of components such as diesel engines and suspension system * Toyota Karakas Auto Parts has commenced production at a ewe engine and transmission plant for the Otiose range of sedans and hatchback cars in India. Production at the new plant involves an investment of about RSI 500 core (IIS$ 92. 59 million) * Five auto component companies in Achaean-Range Group, MM Forgings, Super Auto Forge, Antaean Industries and Auto Parts-are setting up a solar power plant in Tamil Undue. The solar farm, with an installed capacity of seven megawatt (MOW), could entail a total investment of RSI 70 core (IIS$ 12. 96 million) * Volkswagen (W”) India Pet Ltd has set up a unit to manufacture and package parts of the Event and Polo for export at its Pun plant.

Announcing the inauguration of the parts and components Business Unit, the company said it has invested around RSI 56 core (IIS$ 10. 37 million) to develop it Government Initiatives Union Minister for Petroleum and Natural Gas. The Government’s electric vehicle (EVE) policy calls for a plan worth RSI 23,000 core (IIS$ 4. 26 billion), to promote the production of electric and hybrid vehicles over the next eight years, and set a sales target of 6 million units by 2020. In a bid to improve safety features of vehicles, the Government has asked automobile manufacturers to develop a gadget which would e similar to the ‘black box’ installed in planes.

The owner would not be able to turn the instrument off or on and the snapshot could be viewed by legal bodies, insurance companies and automakers. Moreover, Mr.. C P Josh’, Minister of Road Transport and Highways, Government of India, has also asked manufacturers to contemplate on the option of fixing such IT-enabled instrument to improve safety and security of the vehicles. Some of the highlights of the Union Budget 2012-13: * The auto industry is encouraged by 5 years extension of 200 per cent weighted deduction of research and development (R&D) expenditure under Income Tax Act and also introduced the weighted deduction of 1 50 per cent for expenditure on skills development.

These measures will help the industry improve its products and performance * The increase in customs duty on cars and multi-utility vehicles (Moves) valued above IIS$ 40,000 from 60 per cent to 75 per cent seems to be a step to encourage local manufacturing, value addition and employment * Also, the confessional import duty on specified parts of hybrid vehicles has been extended to lithium ion batteries and other parts of the hybrid vehicles. This will help the industry to achieve better cost efficiency Road Ahead The vision of Automotive Mission Plan (AMP – 2006-16) aims India to emerge as the destination of choice in the world for design and manufacture of automobiles and than 10 per cent of the gross domestic product (GAP) and to provide additional employment to 25 million people by 2016.

The rapid improvement in infrastructure, huge domestic market, increasing purchasing power, established financial market and stable corporate governance framework have made the country a favorable destination for investment by global majors in the auto industry, as per AMP 2006-16. The Plan aims at doubling the contribution of automotive sector to the GAP with facial emphasis on export of small cars, MI-Jobs, two & three wheelers and auto components. Exchange Rate Used: INNER 1 = US$ 0. 01854 as on April 23, 2013 Manufacturing Sector in India I Last Updated: June 2013 | Manufacturing: Brief Introduction’s is largely moving towards high-end manufacturing with the Government announcing multiple reforms and policies in the sector. Indian manufacturing industry is largely driven by low-cost, skilled labor, adequate land laws and reasonable cost of capital.

McKinney and Co believes that Indian’s manufacturing sector has the potential to create up to 90 million Jobs by 2025. Today, the sector generates about 45 million Jobs, 80 per cent of which are in the unreasoned segment. Linda is increasingly adopting global approach to become a strategic player on international platform. Entry of foreign companies in manufacturing industry has anchored technology-based orientation which is subsequently helping India create a core and contemporary manufacturing sector, fed by ancillary manufacturers that rely on simple technical skills. Dolomite’s global index, 2013, for 38 nations, has ranked India the fourth most competitive manufacturing nation, behind China, the US and Germany.

Not only this, but even the Global Manufacturing Competitiveness Index, 2013, based on a survey of Coos, executives and other officials of 550 global manufacturing companies, has positioned India as second five years down the line, next only to China. Growth Trend HISS India Manufacturing Purchasing Managers’ Index (PM) – a measure of factory production – stood at 50. 1 in May 2013. The official data showed that the Indian economy grew 4. 8 per cent in the January-March 2013 quarter. Manufacturing sector recorded a year-on-year (y-o-y) growth at 2. 6 per cent in the three months to March 2013. The survey indicated that orders from abroad came in at a faster pace than in April 2013.

Manufacturing: Key Developments and Investments * Busch Rexroth, manufacturer of hydraulic components and systems (which are used in machinery applications and engineering, factory automation and mobile applications), has commenced operations at its new plant in Sand with an investment of RSI 280 core (IIS$ 49. 07 million). The company intends to acknowledge the specific regional product and system requirements through this new facility and it is not only expanding production but also stepping up sales and development. The company, present in India for over 35 years, also plans to establish an additional project at its old site in Vat in Mohammedan. * Japanese electronics goods major Panasonic 2013-16 and restructure its operations. The company intends to introduce new products and form new alliances with Indian business groups to increase its market share and beat competition.

While laying sound focus on local manufacturing and expand production processes, the company will continue focusing on developing India-specific product innovations. Panasonic aims to increase the contribution of coal manufacturing to as much as 60 per cent of overall sales from the current 46 per cent. * The Netherlands-based coordinated design bathroom company Coral International, is set to commence operations in India from July 2013. The company plans to set up a manufacturing facility for its flagship products in India as it foresees a good potential here. “India is likely to emerge as the manufacturing base for our operations in Asia over the next few years,” said Nielsen Pillar, CEO, Coral International.

Coral has decided to shift its focus on Indian market owing to the country’s huge population, coupled with affinity towards European designs. India would be the first country outside Europe where Coral is planning to establish a manufacturing facility. At present, it has production units in Holland, Poland, the I-J, Germany, France and Italy. * Helical Auto Technology India Pet Ltd, a subsidiary of the UK-based Helical Technology Ltd, has recently established a modern manufacturing unit in Pun at an investment of around RSI 16 core (IIS$ 2. 80 million). The new plant would have an annual installed capacity of four million units. The company also plans to design parts of some components, particularly to cater Indian customers.

Manufacturing: Government Individualistic is set to become a manufacturing hub for many international majors owing to its business-friendly environment and supportive Government. * Andorra Pradesh will soon get its third National Investment Manufacturing Zone (MINIMS) in Prams district. “Andorra Pradesh will be the second state in the country to have more than two Minims being set up in line with National Manufacturing Policy of 2011,” And Sahara, Union Minister for Commerce reported. With this, the total number of zones being set up in the country would go to 13. The Indian Government provides numerous incentives such as exemption from capital gains tax and liberalized labor and environmental norms to these zones.

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