automobile industry & make in india

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Automobile Industry &

Make In India

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Automobile Industry In India

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Introduction

• One of the largest auto industries in the world, the industry accounts for 7.1% of the country's Gross Domestic Product (GDP).

• As of FY 2014-15, around 31% of small cars sold globally are manufactured in India.

• Annual sales of 19.8 million vehicles in FY15 — the auto industry is set to become the engine of the government’s ‘Make in India’ initiative, according to EY report.

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Market size

• The auto industry produced a total 19.84 million vehicles in April-January 2016 as against 19.64 million in April-January 2015.

• Domestic sales of Passenger Vehicles grew by 8.13% in April-January 2016 over the same period last year.

• Within the Passenger Vehicles, Passenger Cars increased by 10.18%, during April-January 2016 over April-January 2015.

• The domestic sales of Commercial Vehicles increased by 9.43% in April-January 2016 over the same period last year.

• Sale of Medium & Heavy Commercial Vehicles (M&HCVs) increased at 30.19%.

• India is also a prominent auto exporter and has strong export growth expectations for the near future. In April-January 2016, exports of Commercial.

•Vehicles registered a growth of 18.36% over April-January 2015.

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Advantage India

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• LOW VEHICLE PENETRATION and improving economic fundamentals

• HIGHER ANNUAL SALES: India saw an annual sale of 19.8 million vehicles in FY15.

• FASTER GROWTH: India is also one of the fastest growing auto markets, with production of 23.4 million vehicles in FY15 and a leading position in several sub-segments.

Salient Features

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Key Growth Drivers

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• REGULATORY ENVIRONMENT: A stable and supportive regulatory environment is critical to drive growth.

• Cleaner transport: Advancement of BS VI norms, likely rollout of the 'End of life' policy, FAME-India scheme

• Safer transport: Upcoming Road Transport and Safety bill, International Safety Standards from 2017 ‘Make in India’ and the initiatives to improve the ease of doing business.

• GST: Implementation would lead to reduction in logistics cost, lower tax burden on vehicles, greater transparency, reduction in cost of doing business.

• FDI growth: A sharp turnaround in foreign direct investment was seen in the year 2014. After declining for two successive years, investment in India has bounced back with 32% growth to $25 bn — significantly ahead of the 7% growth in FDI seen all over the world

Drivers of the Industry

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Key Segments

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Passenger vehicles

• Passenger cars

• Utility vehicles

• Multi-purpose vehicles

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Two-wheelers

• Mopeds

• Scooters

• Motorcycles

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Three-wheelers

• Passenger carriers

• Goods carriers

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Commercial vehicles

• Light commercial vehicles

• Medium and heavy commercial vehicles.

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Huge demands for low-cost electric vehicles that are suited for safe short-distance urban commutes (averaging 50-100 km/trip) that are rugged enough to perform reliably through India’s summers and monsoon. It is estimated that total electric vehicles sales would amount to 6-7 Million units by 2020.

Electric vehicles

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FDI In The Sector

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Foreign Direct Investment

The industry has attracted Foreign Direct Investment (FDI) worth US$ 14.32 billion during the period April 2000 to December 2015, according to data released by Department of Industrial Policy and Promotion (DIPP).

Major Foreign Players in India include:

• Suzuki (Japan)

• Nissan (Japan)

• Piaggio (Italy)

• Volkswagen (Germany)

• Renault (France)

• Hyundai (South Korea)

• General Motors (USA)

• BMW (Germany)

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What 'Make In India' Has For The Industry

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Investment Opportunities

• Automobile manufacturing to become main driver of ‘Make in India’ as passenger vehicles market expected to triple to 9.4 million units by 2026

• Separate and independent Department for Transport to be set up that will resolve issues related to fuel technology, emission, exports and motor body specifications

• Formulation of a scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles to promote affordable and efficient electric and hybrid vehicles in the country

• The Automobile Mission Plan (AMP) 2006- 2016 designed by the government, aims to accelerate and sustain growth in this sector

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Major Developments in the Sector

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Major Developments

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

• Japanese two-wheeler manufacturer Honda Motorcycle and Scooter India (HMSI) has opened its fourth and world’s largest scooter plant in Gujarat, set up to initially produce 600,000 scooters per annum to be scaled up to 1.2 million scooters per annum by mid-2016.

• American car maker Ford has unveiled its iconic Ford Mustang in India and will make its debut in second quarter of FY2016 within the price band of Rs 45 lakh (US$ 66,146) and Rs 50 lakh (US$ 73,496) in the Indian market.

• Nissan Motor Co. Ltd is in discussion with Government of India to bring electric and hybrid technologies to India as the government plans to reduce air pollution caused by vehicles.

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

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Major Developments (Cont.)

• 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$ 513.5 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).

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Conclusion

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The Final Word

The Indian automotive sector has the potential to generate up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12 per cent to India’s Gross Domestic Product, as per the Automotive Mission Plan 2016-26 prepared jointly by the Society of Indian Automobile Manufacturers (SIAM) and government.

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