9/13/2010

1

Automobile sector - Overview

Presentation to the French

Delegation 12th January 2010

Flow of thoughts

• Indian automotive sector

• UNIDO initiatives

• Demand for technology..

9/13/2010

2

Automotive Clusters in India

CHENNAI

Clusters in Tamil Nadu

Textiles, Textile machinery, Pumps, Mot

ors, Castings & Foundries, IT

Light engineering, Textiles, A

pparel, Auto components

Fertilisers, Chemicals, Copper, Minerals, Heavy

Water

Boilers & Power Plant equipment, Light

Engineering

Power Plant equipment, Chemicals,

Leather

Automobiles, Earth movers, watches, IT

Steel, Steel Products, Sago, sugar

Automobiles, Auto-components, battle tanks, Rail Coaches

Electronic hardware, IT, leather, apparel

9/13/2010

3

Ambattur

Thirumudivalkam

Guindy

EekaduthangalThirumulizahi

Ambattur

Perungudi

MM Nagar

Irungattukottai

Thirumudivakkam

Thiruvallur

Auto Clusters around Chennai

Another view

IrungattukkottaiIndustrial ParkIrungattukkottaiIndustrial Park

Chennai Port

Ennore Port

Chennai InternationalAirport

SriperumpudurIndustrial ParkSriperumpudurIndustrial Park

Ennore SEZEnnore SEZ

Mahindra Industrial Park

Gummidipoondi & EPIP Industrial ParksGummidipoondi & EPIP Industrial Parks

TIDEL Park

Ford Car Project

Hyundai Car Project

OragadamIndustrial land

Nokia

Foxconn, Flextronics

Motorola cluster

BMW car project

HM-Mitsubishi car,

Caterpillar

9/13/2010

4

Industry Structure in India

Vehicle Manufacturer

(OEMs)

Tier I Assembler

Tire II Companies

Tire III Supplier

Manufacturers and Associations

SIAM

ACMA

No specific

associations

Industrial

Estate Associations

Value Chain in Auto component

industry

9/13/2010

5

Composition of the components

Stake holders in the industry

Stake holde

rs

Tire I

assemblers

Tier II

suppliers

Rep Ind

Estates in the region

Domesti

c VM

State

Gov

Central

Gov

Internati

onal VM

Banks

Insuranc

e cos

9/13/2010

6

Auto History of South India

• Integral Coach Factory (ICF) : 1955

• The Heavy Vehicles Factory (HVF) 1965

• Enfield India

• Standard Motors

• Ashok Leyland 1948

• TAFE 1960

• Hindustan motors -Mistibushi Assembly plant 1990

• Hyundai Motor India Limited (HMIL)

• Ford has been in India since 1907 but established a joint venture in 1998.

• Toyota Kiloskar Motors (TKM) 1997,

Automotive Sector in South India

• Caterpillar India Private Limited (CIPL) 2001

• MANTakraf in Hosur

• Volvo Bangalore 1998

• BMW in 2007

• Renault Nissan Automotive India Pvt Ltd in 2007

• TVS motors was established in 1982 in Bangalore

• Bharat Heavy Electricals Limited (BHEL), established in 1953

• Hindustan Aeronautics Limited established in 1940

• Hindustan Machine Tools company 1953

• Larson and Tubro (L&T)

• TI Cycles – Now introduced BSA Motors

• Reva Automobiles – Electric Vehicles

9/13/2010

7

Indian Auto News

• SIAM: the total vehicle sales in the country rose to 10,00,500

units Vs 5,97,241 [2008]. - recorded an impressive 68 per cent

growth in sales

• Passenger car sales stood at 1,15,268 units in December, the

ninth straight month of growth, compared to 82,174 units in

the same month a year ago, up 40.27 per cent.

• Motorcycle rose by 76.70 per cent to 5,92,596 units in the

month from 3,35,370 units in December 2008,

Just over heard..

Medium sized company CEO:

“we have recovered the

losses of 2008 in the first

half of 2009” Nov 2009

SME CEO “ Recession ?

Where” in Nov 2009

The hundreds of load bodies which the supplier used dump in our back yard has disappeared – Neighbor of a metal forming unit supplying to Ashok Leyland

Can you introduce

Japan with the supplier

of a OE who is coming

to India

Direct tax collections have gone up by 44% while still many are filing losses because of recession

Payments have come back to almost 30

day cycle from 6 months…

There is a domestic market in India – Every one seems to have forgotten this

9/13/2010

8

Auto Component History

• The TVS group [1911]

– Sundaram Fasteners,

– Lucas TVS, Brakes India,

– Wheels India,

– Sundaram Brake Linings,

– TVS Motor Company and

– TVS Electronics

• Amalgamations group

– Simpsons, 1840

– India pistons 1949

• Rane Group1929

– 10 Divisisions

• Vistion

• TRW Automotive 2005

• Sona Steering Systems

1987

Auto comp SWOT

• Strengths– Least number of man days lost

– Higher value addition market

– Not a commodity market

– Better Power Scenario

– Closest to the port

– Less number of break ups of JVs in Auto component sector

• Weaknesses– Not in Coimbatore

– Unskilled Labour Shortage [ now imported from north India]

– Recently there has been some power cuts

– More break ups in auto motive sector.

• Opportunities

– Losses of 2008 recovered

in the first half of 2009

– Car sales zooming

– Commercial vehicle also

has revived.

• Threats

• More players coming into the market

• Market being commoditized

• Even local Oes are importing from

China

– Stiff competition from countries like

turkey in Europe, Vietnam, Indonesia in

Asia and Brazil in South America and

the stolen goods markets of west

Africa

– Aftermarket way of life

9/13/2010

9

What’s Unido doing?

9/13/2010

10

About us

UNIDO HQ Vienna

UNIDO India

Consolidated Project for SME

Development

Cluster DevelopmentInvestment and

Technology Promotion

SPX [ Database] CPP [ Introduction by

associations in UNIDO format]

Evaluated investment

Proposals through UNIDO Software

Exhibition Participation

Supplier Development Programme

Mutual Credit Guarantee Schemes

UNIDO ACMA Programme

24 other Projects

www.spxindia.org

Backed by UNIDO’s

International Database www.spxindia.org

9/13/2010

11

Sub-contracting and Partnership Exchange (SPX)

Regions Number of

Companies

Profiled

Profiling Partner Target

Association

Busines

s

promoti

on

Partner

Chennai 255 MSME-DI

TNTDPC

AIEMA CII

Pune 210 CII Auto Comp MCCI

NCR 250 CII Auto Comp CII

www.spxindia.org

Composition of the clusters - Chennai

Brake Components

7%

Consumables

1%

Electrical

6%

Engine Component

57%

Forged and Casting

Componets

8%

Metal forming

7%

Others

12%

Plastic

Components

1%

Rubber

Componnets

1%

Higher concentration of Machining companies, Chennai has a

many tire I

9/13/2010

12

Composition of NCR SPX

Composition of Pune SPX

9/13/2010

13

77% of SPX companies are ISO

Certified & 34% are TS Certified

Export Destinations of SPX companies

49%

22%

19%

6%

2% 2%

0

10

20

30

40

50

60

Europe North America East Asia Middle East South America Africa

9/13/2010

14

Training for associations to have technical

database [SPX]

26th March 2008 SPX Training

Programme at MSME DI Chennai

2nd SPX training Programme

in Chennai CII (20th October 2008)

More training programmes on SPX :

3. SPX Training Programme in Pune

4. SPX Training Programme in DelhiCreated by

Engineers

from

Associations

Trained associations to evaluate investment

project

Comfar III Training Programme

in EDI Ahmedabad

Comfar III Training Programme

With CII Chennai

Comfar III Training Programme

With MCCIA Pune

9/13/2010

15

Investment & Technology Proposals for

promotion

Sector Number of investment

Proposals

Value of Investments in

Millions of USD

Auto Components 22 32 million

Technology Transfer

Proposals

20 180 million

All through the Associations!!!

Introduction of PE VC to Target groups

IVCA Training Progamme in AIEMA

Chennai 28th March 2008 IVCA Training Progamme in MCCIA Pune

Venture

Capital

Education to

buy New

Technology

9/13/2010

16

Technology transfer in Auto sector

Experienced Korean company manages Indian Unit

Korean Technology

Emphasis on systems acceptable

Japanese suppliers manage the local technology

Focus on getting it done.

“Parent supplies the designs”

Technology and adoption decision left to the locals

Indian management decides the systems

Based on customers drawing

Technology development through Experience

Systems management discretion

“Follow the Parent”

Graduation in Technology

Strong System enforcement

Independent

EuropeanJapanese

Korean

Subsidiaries

hot partner?

• Smaller Global suppliers

• Weight optimization

• Alternate materials

• Structural optimizations

• Emission tech owners

• Cos who cant export large products to India

• Suppliers – tech providers

• Design authors

• Hybrid

• Embedded software

Welcome technologies on Low cost, low weight, more space and economy

9/13/2010

17

Business in India

• Business through partnerships

– Joint venture

– Subsidiary

– Branch office

• Register with Registrar of companies [ in some cases the approval is required from Delhi]

• Buy the land and build the factory

• You need some registrations like the health, labour, tax environmental

Where to find the partners?

• Either buyer industry group

• Seller industry group

• Consultants

• Associations

9/13/2010

18

Write to us

• If you need

– Identify partners in India / Europe

– Evaluation of the projects through associations

– Organization of B2B meetings

– Factory visits

Thank you

James Daniel Paul

Investment and Technology Promotion Expert

United Nations Industrial Development Organization

j.paul@unido.org

www.unido.org

www.spxindia.org