Industry of the Month Automobile Industry in India

eBizWire
Vol. I Issue. VIII, September 2012
Insight

Biz India News Biz Policy Updates The Indian Automobile Industry

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Business Idea of the Month StartBizIndia Discussion Platform Upcoming Business Summit Contact us

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Biz India News

On August 29, 2012, Automotive components maker Piolax India, a subsidiary of Piolax of Japan, inaugurated its first Indian facility at the Sri City multi-product special economic zone in Andhra Pradesh. The plant is slated to commence commercial production shortly. Piolax is a global manufacturer of auto parts such as industrial fasteners, coil springs, flat springs and compact units. It has facilities in the US, the UK, China and Thailand. The Volkswagen Group aims to increase output by 10-15 per cent on a 100-million investment at its production facilities in Aurangabad and Chakan in Maharashtra. On September 06, 2012 John Chacko, Volkswagen Group Chief Representative for India, said the investment would go towards minor model changes and upgradation of the two factories. The funds will also benefit Skoda and Audis domestic operations. The German automaker has a 1.3-lakh annual production capacity at Chakan, where it makes the Polo, Vento and Skodas Fabia and Rapid models. On September 05, 2012, In a bid to replicate the success of Israel in the farm sector, the Gujarat Government plans to set up a farming educational institute in collaboration with Israel, offering post-graduation and Ph.D programmes with practical training and degree from Israeli universities. India and Pakistan will soon sign three agreements on customs cooperation, trade grievances redressal and mutual recognition, Commerce and Industry Minister Anand Sharma said on Tuesday. India and Pakistan will soon sign three agreements on customs co-operation, trade grievances redressal and mutual recognition, Commerce and Industry Minister Anand Sharma said on Tuesday on September 05 2012. The production of cement from Reliance Cement Company Private Ltd, a subsidiary of Reliance Infrastructure Ltd (Reliance Infra), has begun from the first manufacturing unit at Butibori, Nagpur in Maharashtra. On September 04, 2012, the unit would essentially meet the needs of the market in Vidarbha, the company said in a communication to the stock exchanges. Storage technology software maker EMC has signed Netmagic Solutions for design, architect and run its cloud computing infrastructure for Indian and global companies. As a part of this tie-up, Netmagic will consolidate IT infrastructure that is hosted on private or public cloud and consolidate it into a hybrid cloud computing environment. On September 03, 2012, a hybrid cloud environment helps in a mix and match of public and private IT infrastructure that can be hosted and accessed as per their requirements. Four leading Chinese companies will visit Ahmedabad in September to explore investment opportunities in Gujarat. The companies- Wuxi Xinje Automation, Sunfar, Estun Automation and Zhejiang Chint Electric Co-are eyeing investments in greenfield projects and partnerships in Gujarat. The Chinese companies will meet entrepreneurs in Gujarat at a business conference organized by India China Economic & Cultural Council (ICEC) on September 12, 2012.

Headlines
Japanese auto parts maker sets up unit at Sri City SEZ

Volkswagen to invest 100 million in India

Israel to set up 3 centres of excellence on farm tech in Gujarat

India, Pakistan to sign 3 pacts soon to boost trade: Anand Sharma

Reliance Cement begins production from Butibori unit

EMC ties up with Netmagic Solutions

Leading Chinese companies eye Greenfield projects in Gujarat

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Biz Policy Updates

RBI allows direct investment by Indian entities in Pakistan
On September 10, 2012.Reserve Bank of India has allowed Indian entities to make direct investment in Pakistan, giving push for bilateral trade and investments. It has now been decided that the overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route, RBI said in a notification on Friday. Reserve Bank of India has allowed Indian entities to make direct investment in Pakistan, giving push for bilateral trade and investments. It has now been decided that the overseas direct investment by Indian Parties in Pakistan shall henceforth be considered under the approval route, RBI said in a notification on Friday. The move comes days after India allowed investment from Pakistan. RBI said it will make amendments to the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, to incorporate changes. Bilateral trade between the neighbours stood at about $3 billion and is expected to reach $6 billion in the next three years. Earlier, Pakistan had expressed concern over certain issues related with investments from India.

Legal Headlines
RBI allows direct investment by Indian entities in Pakistan

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The Indian Automobile Industry

Introduction: Choices add the ultimate spice to life and India with the largest number of people (well almost!) needs a lot of them. That is especially true when it comes to things majorly characterized by the ever-evolving technology. And obviously, when theres a demand, theres going to be a large number of industry players competing with each other to bring out the best possible product in a given price change. One such industry is the Indian Automobile Industry which very visibly stays on its toes to bring new models for the domestic and international markets alike. The domestic players are sincerely trying to meet the international standards and yield the best quality. Nissan's Managing Director in India, Mr. Kiminobu Tokuyama says India is a rapidly growing market, so therefore it is very important for global auto manufacturers". Indias potential as a manufacturing country and as a consumer base is being taken seriously all over the world. India is no more just an information technology super power. A country which was more or less ignored by the rest of the Asia, India is now becoming home to several Asian brands owing to increasing opportunities and a progressive economy. With a turnover of almost $59 Million US Dollars, this industry provides employment to 13 million people in the Indian Work-class. This industry is one of the most competitive industries because the manufacturers face some challenges like increasing fuel efficiency and reducing emissions perpetually apart from doing something innovative on a continuous basis.

The Indian Automobile Industry is broadly classified into 4 categories:

Two Wheelers form the major segment of Indian Industry with almost 75% market share and hence leaving all other segments far behind. India forms the prefect market for two wheelers because of huge population the major chunk of which is not urban class. Passenger Segment Passenger Vehicles & Vehicles. Motor Vehicle consists of Cars, Utility Multi Purpose

Indian Auto Market- Reasons to cheer:

One of the largest automobile markets in the world, India has some remarkable facts to its credit which make it World renowned. The Indian Auto Industry has a bright future because of several factors working towards increasing demand for automobiles: 1. Rapid Urbanization: Currently only 21% of the population lives in the urban areas. Given how India is performing, the figures are hoped to touch 35% by 2020 and 40% by 2030.
[Source: www.newgeography.com]

Commercial Vehicles & Three Wheelers combined have a market share of 9% indicating that its the households which are the major consumers in this industry.

2. Rising per capita GDP: The per capita GDP of India increased from 1200 USD in 2011 to almost 1330 USD in 2012. This is further expected cross the 2000 mark by 2015. Increasing GDP would mean increased purchasing power and hence increased demand for automobiles
[Source: www.tradingeconomics.com]

The automobile industry is one of the most competitive industries because the manufacturers face some challenges like increasing fuel efficiency and reducing emissions perpetually apart from doing something innovative on a continuous basis.

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The Indian Automobile Industry

3. Overall growth of other industries: Industries are usually
interdependent on each other. The effect of expansion of other industries is bound to percolate to the automobile industry as well. Since transport is a basic need of every industry, demand for automobiles will rise with [Source: www.nasscom.org] every positive change in an industry.

Statistics India
[Source: www.ficci-b2b.com ] [www.ciiautoserve.in] Largest Motorcycle Producer in the World

1 0.8 0.6 0.4 0.2 0

81% 49% 44% 42% Growth Rate 21%

Source: ibef, SIAM, Nasscom

2nd Largest Two Wheeler Market in the World

31%

Largest Three Wheeler Market in the World

4. Car buyers getting younger: It is no more a hidden fact that India is one of the youngest countries in the world with a median age of almost 26 years; much lower than the Worlds biggest economies. It only shows that the work class constitutes majorly of young individuals. The car buying age has been on a decline. Where a person aged 39 used to buy a car in the year 2000, this age has gradually come down to 33 in 2010. It is only expected to become lesser in the coming years. 5. Growing Middle class: With the middle class of India growing annually, benefits of this sector are still untapped. It is the transition from the lower class to the middle class which converts car into a need from a luxury. Other factors like affordability, innovation, infrastructure facilities and price of fuel also affect the demand for automobiles to a large extent. These challenges keep the automakers on their toes all the time. With the middle class in India still growing annually, the benefits of this sector are still untapped. Recent Developments in the Industry: [Source: www.ibef.org] Ford India: In the wake of increasing petrol prices, it has expanded its diesel engine production capacity of its Chennai plant to keep pace with the changing demand. The plant that had the capacity to produce 2.5 Lakh engines annually in 2010; shall now be able to produce 3.4 lakh engines. It also has the capacity of producing 2 Lakh cars. Isuzu Motors Limited (Japan): With a capital outlay of Rs. 1000 Crores, it is planning to build a Greenfield project to target the small commercial vehicle and MUV segments.

4th Largest Tractor Market in the World

2nd Largest Scooter Producer in the World

5th Largest Commercial Vehicle Market in the World

5th Largest Bus & Truck Market in the World

5th Largest Auto Producer in the upcoming economies

10th Largest Passenger Car Market in the World

6th Largest Passenger Vehicle Producer in the world

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The Indian Automobile Industry

Renault (French auto major): By launching it midsize SUV Duster in both petrol and diesel variants, it has successfully entered the Indian SUV market. Renault has already launched 3 more vehicles this year prior to this. M&M Group: M&M Group after spending 4 years in the Indian 2 wheeler segment has launched its research and development (R&D) center for two-wheelers in Pune with an investment of Rs 100 Crores. MSIL (Indias largest auto maker): It shall merge the group unit Suzuki Powertrain India Ltd with itself so that all the diesel manufacturing facilities are under the same management. The merger will be conducted through share swap without any cash transaction.

Recent Developments in the Automobile Industry:

Ford India Isuzu

(Japan) Motors Limited

Renault (French auto major) M&M Group MSIL (Indias largest auto
maker)

Prominent Players in the Indian Automobile Industry: These are the names which have a brilliant Pan India coverage. Apart from this, there are brands which dominate a particular region of the country depending on their popularity in that area. This can be studied from the following picture: India has some commendable players in the automobile sector. The market shares of the major automotive companies at the end of May 2012 looked something like this;

(Source: SIAM)

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The Indian Automobile Industry

Foreign Direct Investment Policy A policy of automatic approval up to 100% FDI has been a boon for the Industry. The policy alone has led to a turnover of 12 billion USD in the Indian auto industry. No need for licensing and no restriction on import of auto components make this sector very attractive for foreign investors. Apart from this, advanced technology yet cost effectiveness and efficient manpower add to the list of advantages which India offers as a target country for investment. With a lot of foreign players like General Motors, Toyota, Renault, BMW, etc. already carrying out their activities successfully in India, FDI has definitely contributed to the growth story of the Indian auto The Future Forecast: The future of Automobile Industry is so promising and cheerful that if the statistics go as estimated, then, the share of Indian exports in the Global auto market will almost triple in the years ahead. The overall automobile production in India would expand by 9.6 per cent in 2012-13. The Passenger Vehicle Market of India will sell almost 5 million vehicles by 2017-2018. The Indian Auto Exports will also grow and cross the 17 billion USD mark by 2015-2016.

Some Companies Automobile Industry India

in in

And, there are factors which are demand determinants playing in favour of the Indian automobile Industry like rising family Income, product innovations, demographics and favourable duty structure; there is a lot which the industry is yet to see. The future looks bright and being an entrepreneur, if someone is looking for opportunities in this Industry, anything creative/ innovative related to the automobile industry is bound to work. (Source: SIAM, ACMA, FICCI and CIME)

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Business IDEA OF THE Month

CarExchange.com From dreaming about buying a superfast car to actually experimenting with it during the teenage; from buying a swanky car for the first time from your own salary to buying a big enough and safe car when you finally have a family of your own; it is the same story for all. And now, with the number of independent girls on the rise, the car story for them is pretty similar too. No wonder, a car is always one of the first things in everyones list of musthaves. But, actually having a car; new, rented or second-hand is a separate story in itself. The whole process of choosing a car, finding the appropriate dealers, negotiating and finalizing a deal and everything else that follows surely; is a cumbersome process. What would you choose? Calling up and meeting each suitable vendor individually on your own? Or logging on to a website that provides all information at one place? So that the only thing that you need to do is choose the best deal and make a final call. Well you know what we are hinting at. If you are tech savvy, know the importance of a good and interactive website and are a car lover; you have an interesting opportunity at hand. Taking cue from e-commerce based portals; you can create a similar website giving various details like: Different types of cars and their variants; the authorized company dealers and other vendors for selling & reselling of cars, individuals interested in purchase or sale, etc. The main idea is to create an online car bazaar so that you can bring the buyers and sellers together and facilitate trade between them. Such a website will give people a one stop solution to all their car woes. What more? You can even add information about various service stations for after sale requirements and publicize attractive service packages offered by them. For starting this; you will have to register your business entity, get a web domain registered which shall cost you anywhere from Rs. 500 and up for a year, hire a web designer for your website, collect the database of all the information you decide to put on your portal and tie up with a payment gateway like PayPal on your website. Last but not the least! Marketing! Everything done, your business will depend on this one magic word. To attract people you have to let them know first of all. You can go a step forward by including car accessories in the list of offerings. Keep updating regularly and add special features like latest car news for the car enthusiasts and you should be ready to keep this business going.

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StartBizIndia Discussion Platform

Mr. Jhunjhunwala is a businessman who wishes to set up an industrial unit in Gujarat, India. He has a successful retail business which he has run for 20 years and wishes to transfer to his sons. This however is also the reason that he does not know how to go about an industrial set up. What all approvals should he be looking for? A. Industrial settings are broadly classified into 4 categories in our country. Depending on the kind of set up, one has to seek the relevant industrial approval from the relevant authority. For setting up an SME, an Entrepreneurship Memorandum is required to be filed with the District Industries Centre for approval. For an industrial undertaking that is not an SME but also does not require a compulsory license; then an Industrial Entrepreneurship Memorandum shall be filed with the Secretariat for Industrial Approval (SIA) For enterprises falling under the compulsory licensing list, a letter of Intent (LOI) is required to be filed with the SIA in a prescribed form. If one wishes to set up a 100% Export Oriented Unit (EOU) or an SEZ unit, then an application in the prescribed form has to be filed with the Development Commissioner, KASEZ

However, setting up of a business requires taking care of a lot of aspects. Various other approvals that are required for an industrial set up are as follows: Registering the Business Entity: Registration with the Registrar of Firms is required if you choose to have a proprietary concern or a Partnership firm The Registrar of Companies handles applications for forming of a Company or a Limited Liability Partnership (LLP)

Approvals for the Land: Again the approvals will depend on the type of land sought. For allotment of plot in an Industrial estate, approval from the Gujarat Industrial Development Corporation (GIDC) is required. The District Collector shall approve any applications for allotment of Government Land. Agricultural land can be purchased through negotiation for which no approval is required per se.

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Upcoming Business Summit

Indian Home Congress 2012 Indias first of its kind of show on Home Dcor, Home furnishing, and Home Improvement Sector. Date: - October 04, 2012 to October 05, 2012 Venue: - Hotel Claridges, Surajkund, Delhi/NCR Forthcoming Auto Industry related Events
[Source: www.siamindian.com]

International
Auto Show India 2013

Auto Show India 2013 With India emerging as a leading export hub for automobile companies and Sri Lanka coming up as a an important country for business opportunities in the automobile sector for India; this second edition of the Auto Show India organized by the Society of Indian Automobile Manufacturers aims to establish good relations with the Automotive market of Sri Lanka. The show will feature the latest vehicle models and it is hoped that this edition will see far more visitors than the last time. Date: - January 04, 2013 to January 06, 2013 Venue: - Bandaranaike Memorial International Convention Hall (BMICH), Colombo, Sri Lanka

National
Indian Home Congress 2012

Bus & Utility Vehicles Show 2013 Considering the importance of buses in the country and the fact that the Indian bus industry is one of the largest in the world; SIAM is organizing the Bus & Utility Vehicles Show 2013. Given the situation when utility vehicles are rapidly seeing a lot of takers whether it is an SUV or an MUV; this show will focus on showcasing the latest developments in the technology and provide a platform for manufacturers to launch their product and communicate with the prospective customers directly. This will help the manufacturers understand the requirements of the target audience better. Date: - February 14, 2013 to February 17, 2013 Venue: - India Expo Mart, Greater Noida, Delhi-NCR, India

Bus & Utility Vehicles Show 2013

Motor Show Bangalore 2013

Motor Show Bengalore 2013 A show first of its kind, it is being organized to help automobile manufacturers to present latest technology developments, innovations in designs and features, latest products, etc to prospective customers. It is not unknown that this city is the technology centre of India and one of the most financially sound cities too. With a large pool of young working population, Bangalore is definitely bound to benefit from the show. Date: - April 04, 2013 to April 07, 2013 Venue: - Bangalore International Exhibition Centre (BIEC), Bangalore

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Contact Us

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Disclaimer: This paper is a copyright of Corporate Professionals (India) Private Limited. The entire content of this paper have been developed for the new startups. The author and the Company expressly disclaim all and any liability to any person who has read this paper, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this paper.

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