Executive Summary...3
Advantage India.....4
Market Overview....6
Growth Drivers.........16
Opportunities........19
Key Players...........29
Case Studies............32
Useful Information...........40
EXECUTIVE SUMMARY
Over the last decade, the automotive components industry has registered a CAGR of 14 per cent and has
Robust growth scaled three times to US$ 39 billion in 2015-16 while exports have grown at a CAGR of 14 per cent to US$
10.8 billion.
The growth of global OEM sourcing from India & the increased indigenisation of global OEMs is turning the
Rising indigenisation
country into a preferable designing and manufacturing base.
The Indian auto-components industry is expected to register a turnover of US$ 100 billion by 2020 backed by
Increasing turnover
strong exports ranging between US$ 80- US$ 100 billion by 2026.
Contribution to GDP and The auto-components industry accounts for almost seven per cent of Indias Gross Domestic Product (GDP)
employment and employs as many as 19 million people.
Growing automobile India is expected to become the 4th largest automobiles producer globally by 2020 after China, US & Japan.
industry The auto components industry is also expected to become the 3rd largest in the world by 2025.
Among top steel In 2016, India overtook Japan to become the 2nd largest producer of steel in the world & among the
producers lowest-cost ones as well.
ADVANTAGE INDIA
ADVANTAGE INDIA
Growing working population & expanding India is emerging as global hub for auto
middle class are expected to remain key component sourcing
demand drivers Relative to competitors, India is
India is set to break into the league of top geographically closer to key automotive
5 vehicle producing nations markets like the Middle East & Europe
ADVANTAGE
INDIA
Continued policy support in the form of
A cost-effective manufacturing base keeps
Auto Policy 2002 In September 2015,
costs lower by 10-25 per cent relative to
Automotive Mission Plan 2016-26 was
operations in Europe & Latin America
unveiled which targets a fourfold growth
Presence of a large pool of skilled & for the sector
semi-skilled workforce amidst a strong
Strong support for R&D & product
educational system
development by establishing NATRiP
3rd largest steel producer globally hence a centres
cost advantage
100 per cent FDI allowed under automatic
route for auto component sector
Notes: NATRiP - National Automotive Testing and R&D Infrastructure Project; FY - Indian Financial Year (April to March); FY21E Estimated figure for the financial year 2021; Estimates
are from Automotive Component Manufacturers Association of India (ACMA); R&D Research and Development
MARKET
OVERVIEW
PRODUCT SEGMENTS
Auto components
Drive
Body and Suspension &
Engine Parts transmission & Equipment Electrical parts Others
chassis braking parts
steering parts
Brake &
Pistons & Starter Sheet metal
Gears brake Headlights
piston rings motors parts
assemblies
Engine Hydraulic
Halogen
valves & Wheels Brake linings Spark plugs pneumatic
bulbs
parts instruments
Fuel-injection Electric
Steering Shock Wiper
systems & Ignition Fan belts
systems absorbers motors
carburetors Systems
Cooling
Dashboard Flywheel Pressure die
systems & Axles Leaf springs
instruments magnetos castings
parts
Source: ACMA
Number of Players: Organised vs. Unorganised (FY15) Turnover Breakup: Organised vs. Unorganised (FY15)
12000
10000
10000
15%
8000
Organised
6000 Unorganised
4000
85%
2000
700
0
Organized Unorganized
The number of manufacturing units in the unorganised sector are far higher than those in the organised one
Although lesser in number, the organised sector accounts for 85 per cent of total industry turnover (FY15)
India auto component aftermarket is expected to grow at 10.5 per cent to touch US$ 13 billion by 2019-20, as compared to US$ 8.4 billion in
2016-17.
Source: ACMA
Domestic market share by segment (FY16) Production volumes by product range (FY16)
Engine Parts
3.90%
3.27%
Drive Transmission and
7% Steering Parts
Two Wheelers
9% Body and Chassis
14.25% 31%
Passenger Vehicle 10%
Suspension and Braking Parts
Commercial Vehicle
12% Equipments
Others
Engine parts accounts for 31 per cent of the entire product range of the auto components sector followed by drive transmission & steering
parts (19 per cent)
2 wheelers is the largest domestic customer segment for the auto components industry
Original Equipment Manufacturers (OEMs) dominate production volumes by market range; encouragingly, exports account for a round 28 per
cent.
Source: ACMA
Revenues have risen from US$ 26.5 billion in FY08 to US$ 39 Aggregate turnover* (US$ billion)
billion in FY16 at a CAGR of 4.95 per cent during
FY08-16.
CAGR: 4.95%
45
The market size for auto component sector increased by 8.8 per
cent reaching to US$ 39 billion in FY16 from US$ 38.5 billion in
42.2
FY15. 40 41.3
39.7
38.5 39
As per Automobile Component Manufacturers Association
35
(ACMA) forecasts, automobile component exports from India are 35.1
expected to reach US$ 70-billion by 2026 from US$ 10.8-billion in
FY15-16. The Indian auto component industry aims to achieve US$ 30
30.8
200 billion in revenues by 2026.
25 26.5
24.1
20
15
10
0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Note: CAGR Compound Annual Growth Rate, *Turnover data covers supplies to OEMs , aftermarket sales and exports
Source: ACMA
Value of auto component exports (US$ billion) Shares in export volumes by geography (FY16)
12
11.2 3% 1% Europe
10 10.8 4%
10.2
9.7 Asia
8.8 6%
8
North America
36%
6 6.6 Africa
25%
5.1 South America
4
4.2
Central America
25%
2
New Zealand & Australia
0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Indias exports of auto components increased at a CAGR of 11.31 per cent, during FY09-FY16, with the value of auto component exports
increasing from US$ 5.1 billion in FY09 to US$ 10.8 billion in FY16.
Europe accounted for a volume share of 36 per cent during FY16 in Indian auto component exports followed by Asia & North America with 25 per
cent each in same year.
Source: ACMA
Threat of Substitutes
Moderate As there are a large High As government has already Low High demand from car
number of steel and aluminium deregulated the sector manufacturers give them lesser
manufacturers (key raw material)
Increasing number of foreign firms bargaining power
Some of them have their own units (Ford, Volkswagen, etc.) are
Product differentiation is low
which give them linkage power increasing their presence
Cheaper imports of components from
China is increasing
RECENT TRENDS
AND STRATEGIES
NOTABLE TRENDS
Improving product-development
Global components sourcing hub Inorganic route to expansion
capabilities
Major global OEMs have Increased investments in R&D Mahindra Group agreed to form a 60:40 joint venture by
made India a component operations & laboratories, acquiring Italy based car designer firm, Pininfarina SpA
sourcing hub for their global which are being set up to In February 2017, with an investment of US$ 29.74 million,
operations conduct activities such as Pricol inaugurated a 6.58 acres factory in Pune, to develop
Several global Tier-I suppliers analysis, simulation & infrastructure & cater the growing electronic cluster
have also announced plans to engineering animations business for off road, commercial vehicles, 2 wheelers, etc.
increase procurement from The growth of global OEM Ansysco Anand collaborated with Japans Seiken Chemical
their Indian subsidiaries sourcing from India & the to sell coolant & brake fluids in Japan
India is also emerging as a increased indigenisation of
At a cost of US$14 million, Bharat Forge acquired US
sourcing hub for engine global OEMs is turning the
based - WFT & PMT Holding Inc., for expanding their
components, with OEMs country into a preferred
product portfolio in automotive and other industrial
increasingly setting up engine designing & manufacturing
segments
manufacturing units in the base
In May 2017, Rockman Industries Ltd, a Gurugram-based
country ACT established to offer
auto components manufacturer, which acquired Moldex
For companies like Ford, Fiat, technical services to ACMA
Composites in January, has set up an office in the U.K.
Suzuki & General Motors, members for enhancing
through which Moldex will be expand into the U.S. &
India has established itself as process & quality abilities
Europe.
a global hub for small engines through various cluster
programmes In May 2017, Pricol announced its plans to acquire PMP
Auto Components as the brand is focusing on expanding in
North American & European markets. Pricol has inked an
exclusive agreement to acquire the entire ownership in
wiping systems business, including PMPs manufacturing
facilities.
Note: OEM means Original Equipment Manufacturer ACT - ACMA Centre for Technology
Source: Aranca Research
Auto component suppliers are focused on Many Indian firms Indias projected Looking at the opportunity
entering new vehicle segments & specialising in only production is many global suppliers for
manufacturing new products with higher one product market around 8.7mn example Bosch Chassis
margin or segment & are passenger Systems, Tenneco & Faurecia
Both Indian & global manufacturers are looking forward to vehicles per have established R&D facilities
investing in new capacities & newer diversify horizontally year by 2020 in India to adapt global designs
programmes, in order to get long term in other segments (with most of & develop new products
advantage like 2-wheelers, them being Increasing investments in R&D
passenger cars or compact cars) also assists companies in
As markets in North, West & South are
commercial vehicles. Many MNCs setting up laboratories, new
getting saturated, components makers
are now focusing on untapped market like They are stepping like Ford, facilities to conduct analysis,
the Northeast region of the country. up their product Hyundai, Toyota simulation & engineering
development & GM are animations. For instance
As of May 2017, private equity
capabilities in order launching new Magneti Marelli entered into a
investment in the sector increased by 607
to have the best vehicle models JV with Maruti Suzuki, to
per cent compared to the first five months
chance of capturing due to their establish a new plant to
of the previous. Mergers & acquisitions
growth opportunity. earlier success manufacture robotized
were valued at US$ 254.8 million, which
in the Indian gearboxes for automobiles.
is 170 per cent higher compared to Jan-
market.
May, 2016.
GROWTH DRIVERS
GROWTH DRIVERS
Vehicle production in India (thousand units) Capacity addition by 2015 (thousand units)
600
35,000
500
500
400
30,000 400
30,231 300 350
200 240
25,000 100 165
120 100 90
-
Maruti Nissan General Ford Peugeot Honda Toyota M & M
20,000 Suzuki motors
19,764
10,000 30
10,000
25
24.6
20 23.4
5,000 21.6
3,414 19.9 20.2 20.5
2,350 15
698
10 12.9 13.3
-
Passenger Commercial 2 & 3 Wheelers 5
Vehicles Vehicles
0
FY16 FY21E FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
OPPORTUNITIES
DOMESTIC AND EXOPORTS MARKETS HOLD HUGE
POTENTIAL
Domestic Market Potential (US$ billion) Export Market Potential (US$ billion)
140 35
120 30
30
115
100 25
80 20
60 15
40 10 11.2 10.8
38.5 39
20 5
0 0
FY15 FY16 FY21E FY15 FY16 FY21E
The domestic market is expected to account for 71 per cent of Exports will account for as much as 26 per cent of the market by
total sales by 2021 with a total market size of US$115 billion. 2021.
Note: E - Estimate
Source: ACMA
Domestic market potential by components (2020E) Export market potential by components (2020E)
10.70% 11%
Engine & Exhaust Engine & Exhaust
17.10% 6.40% 8%
Electronics and Electrical Electronics and Electrical
16%
25.60% 18%
Body & Structure Body & Structure
Both domestic & export markets are almost similar in terms of potential share by different product types. For example, Engine & Exhaust
components, along with Body & Structural parts, are expected to make up 50 per cent potential domestic sales as well as exports in 2020
Transmission, Steering components, Electronics & Electrical parts are likely to be the other key products.
New technological changes in this segment include introduction of turbochargers & common rail systems
Engine & engine parts
The trend of outsourcing may gain traction in this segment in the short to medium term
Share of the replacement market in sub-segments such as clutches is likely to grow due to rising traffic
Transmission & steering density
parts
The entry of global players is expected to intensify competition in sub-segments such as gears & clutches
The segment is estimated to witness high replacement demand, with players maintaining a diversified
Suspension & braking customer base in the replacement & OEM segments besides the export market
parts
The entry of global players is likely to intensify competition in sub-segments such as shock absorbers
Companies operating in the replacement market are likely to focus on establishing a distribution network,
Equipment
brand image, product portfolio & pricing policy
Manufacturers are expected to benefit from the growing demand for electric start mechanisms in the 2
Electrical
wheeler segment
Metal part manufacturers are likely to benefit from rising demand for body & chassis, pressure die castings,
Others sheet metal parts, fan belts, hydraulic pneumatic instruments, mainly in 2 wheelers industry
(Metal Parts)
The prominent companies in this business are constantly working towards expanding their customer base
INVESTMENTS AND
DEVELOPMENTS
INVESTMENTS HAVE BEEN RISING AT A FAST PACE
Investments in the auto components sector reached US$ 0.5 billion Investments
Visakhapatnam
in the auto
port
component
traffic (million
sectortonnes)
(US$ billion)
in FY16 in comparison with US$ 0.4 billion in FY15.
0.7 0.7
0.5
0.5
0.4
0.1
0.0
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Source: ACMA
CEAT Ltd. is planning to invest around US$ 413.50 million to expand its tire production during 2017-22. The
CEAT Ltd company plans to reach at a production level of 17 million 2 wheeler tires, annually, 1 million Truck & Bus Radial
(TBR) tires & 6 million passenger car radial tires, annually.
As of March 2017, Bosch plans to invest around US$ 119 million annually in the next few years, to develop its
Bosch
headquarters in Bengaluru into a modern technology park & move the manufacturing facility to a new location.
Piramal Finance Ltd, through its Corporate Finance Group (CFG), has invested in two auto components firms; Rs
Piramal Finance Ltd
275 crore (US$ 42.55 million) in RSB Group and Rs 290 crore (US$ 44.87 million) in Indoshell Mould Ltd.
In February 2017, Gestamp invested US$ 38.67 million for a new hot stamping plant in Pune, to meet the growing
Gestamp
demand for safer & lighter vehicles which will reduce the overall weight of the vehicle by 30 per cent
In March 17, Tata Motors & Volkswagen Group signed a MoU to develop vehicle concepts & product components,
Tata Motors
jointly. Skoda Auto AS will be joining the project as a part of the German based auto group.
Mercedes Benz India Private Limited has set up Indias largest spare parts warehouse in Pune, with an area of
Mercedes Benz 16,500 square meters which can stock up to 44,000 parts. It will also include a vehicle preparation centre that can
stock up to 5,700 cars to customise them before delivery.
Exide Industries, Indias biggest automotive battery maker, plans to invest around Rs 300 crore (US$ 45 million) in
Exide industries
West Bengal to expand its capacity for advanced motorcycle batteries over a period of 18 months.
Sundaram Clayton, part of the TVS group, plans to invest US$ 50 million in US and Rs 400 crore (US$ 59.76
Sundaram Clayton
million) in India over the next three years.
Source: News articles, Government Websites, Aranca Research, Ministry of External Affairs, Govt. of India (ITP) Division
Hyundai plans to source gasoline and diesel engines from its Indian manufacturing operations for its domestic &
global operations.
The company is also planning to invest US$ 300 million for a new engine plant & metal pressing shop in India & is also in
plans to open its 2nd manufacturing plant in Rajasthan.
With the encouragement of Indian government, Hyundai, is planning to set up its 3rd new plant in the country & expand its
production capacity to 7.2 lakh units annually.
Ford expanded its retail distribution network of genuine parts in Gujarat, Daman & Diu & Silvassa.
Ford is currently working on a small capacity petrol engine called Dragon which is estimated to be ready by 2016 17. The
Detroit based company is planning to produce 1.5 million units a year globally, 4 lakh of which will be produced in India.
In 2015, the company opened a new production facility in Sanand, Gujarat which is likely to increase its capacity by adding
240,000 cars & 270,000 engines to its existing production level. US$ 1 billion has been invested for this manufacturing plant.
Honda is likely to setup a 3rd manufacturing plant in Gujarat for which US$ 384.9 million (approx.) has been initially invested
which is expected to reach US$ 655.1 million by the end of the project
The company has an export base for certain key engine components in India.
The company planned to invest US$ 59.23 million (approx.) in Tapukara plant to expand production capacity from 120,000
units per annum to 180,000 units per annum.
Toyota Kirloskar Motor disclosed its fully integrated cloud based telematics service for Indian market, by the name Toyota
Connect.
Toyota India under a new joint venture initiated production of diesel engines at Jigani Industrial Area.
POLICIES AND
INITIATIVES
FAVOURABLE POLICY MEASURES AIDING GROWTH
Automatic approval for 100 per cent foreign equity investment in auto component manufacturing facilities.
Auto Policy 2002
Manufacturing & imports are exempt from licensing & approvals.
Set up at a total cost of US$ 388.5 million to enable the industry to adopt & implement global performance
NATRiP standards.
Focus on providing low-cost manufacturing & product development solutions.
Dept. of Heavy Created a US$ 200 million fund to modernise the auto components industry by providing an interest subsidy
on loans & investment in new plants & equipment.
Industries & Public
Provided export benefits to intermediate suppliers of auto components against the Duty Free Replenishment
Enterprises Certificate (DFRC).
Automotive Mission Plan AMP 2026 targets a 4-fold growth in the automobiles sector in India which includes the manufacturers of
2016-26 automobiles, auto components & tractor industry over the next 10 years.
(AMP 2026) It is expected to generate an additional employment of 65 million.
Planning to implement Faster Adoption & Manufacturing of Electric Hybrid Vehicles (FAME) till 2020 which
FAME (April, 2015) would cover all vehicle segments, all forms of hybrid & pure electric vehicles.
The Union Budget 2017-18 has tried to boost skill development by announcing to increase the establishment
Union Budget of skill centres by ten folds.
201718 A reduction in tax on Liquefied Natural Gas (LNG) from 5 per cent to 2.5 per cent was also announced under
the Union Budget.
Note: NATRiP - National Automotive Testing and R&D Infrastructure Project
Source: SIAM, Make in India
KEY PLAYERS
MAJOR PLAYERS BY SEGMENT
Pistons Goetze, Shriram Pistons & Rings, India Pistons, Anand I-Power Ltd.
Engine & engine Engine Valves Rane Engine Valves, Shriram Pistons & Rings, SSV Valves
parts Carburetors Ucal Fuel Systems & Spaco Carburetors & Escorts Auto Components
Diesel-based fuel-injection systems Mico, Delphi-TVS Diesel System & Tata Cummins
Steering Systems Sona Koyo Steering Systems, Rane NSK Steering Systems & Rane TRW Systems
Gears Bharat Gears, Gajra Bevel Gears, ZF Steering Gear (India) Ltd, Eicher, Graziano Trasmissioni & SlAP
Transmission & Gears India
steering parts Clutch Clutch Auto, Ceekay Daikin, Amalgamations Repco, Luk Clutches
Driveshafts GKN Driveshafts, Spicer India Private Ltd., Delphi & Sona Koyo Steering Systems
Brake Systems Brakes India, Kalyani Brakes, Mando India Ltd. & Automotive Axles
Suspension & Brake Lining Rane Brake Lining, Sundaram Brake Lining, Hindustan Composites & Allied Nippon
braking parts Leaf Springs Jamna Auto & Jai Parabolic
Shock Absorbers Gabriel India, Delphi, Mando India Ltd. & Munjal Showa
Electrical Lucas TVS, Denso, Delco Remy Electricals & Nippon Electricals are key players in this segment
Bosch inaugurated its 15th plant in November 2015, specialising in manufacturing power tools.
On August 2015, the company had completed the construction of new manufacturing facility (Phase-1) in Karnataka for which
it had acquired 97 acres of land in Bidadi & invested an amount of US$ 55.68 million. Completion of 2nd phase of Bidadi plant
is slated for 2018.
The company, which had planned to invest US$ 245.66 million for the expansion of its radial tyre capacity at its Chennai plant,
would invest an additional amount of US$ 196.53 million for this plant as on August 2015.
In September 2016, company announced that it will invest US$ 401.60 million, to double its Chennai plant capacity by the end
of 2020
The brand has opened its 6th plant globally in Hungary in April 2017, the investment is worth US$ 53.40 million.
Tata Auto Component Systems is setting up 5 auto component manufacturing plants in Sanand, Gujarat, at an investment of
US$ 62 million. It is also investing US$ 114 million for capacity addition in its Chakan plant in Maharashtra.
Hyundai India had setup a plant in Tamil Nadu with an investment of US$ 333 million to manufacture diesel engines & auto
components in 2015.
NGK Technologies India Pvt. Ltd., subsidiary of NGK Insulators, Ltd. was established to market automotive related & metal
components across India.
Indias TVS Group has acquired a 90 per cent stake in Universal Components UK Ltd for US$ 19.2 million, as part of its
expansion plans. Universal Components is a wholesale distributor of commercial vehicle parts. It has also signed a co-
operation agreement with BMW Motorrad to develop motorcycles below 500cc segment. Looking for new overseas markets.
In May 2015, the company made investments of US$ 24.56 million towards the capacity expansion of 2-wheelers across 2
plants in Tamil Nadu & Uttarakhand.
CASE STUDIES
BHARAT FORGE: INDIAS LARGEST AUTO
COMPONENTS EXPORTER
Bharat Forge is the worlds largest forging company with global 1,400
manufacturing footprint spread across India, Germany, Sweden and
France.
1,201
1,198
components and leading chassis component manufacturer in the
1,115
world.
1,056
1,000
With 50 years of experience, Bharat Forge has transformed itself
983
from just being a supplier of components to a preferred development
898
partner through a concentrated focus on innovation, technology and
value addition. 800
400
200
117
100
31
74
92
- 65
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 E
1961-1985 1990-2001 2002 - 2007 2008 - 2010 2012 - 2013 2014 - 2015
Technology upgradation, commissioned two Commissioned Indias largest commercial open Safran and Bharat Forge form partnership to for
16,000 MT pressline, breakthrough in Japan, forging press, Inauguration of forging and high opportunities in Indian civil and military
USA, UK for supply of power-train and horse power, industrial crankshaft machining aerospace, Inauguration of High Tech Rail
chassis components. facility at Baramati, Inauguration of the Ring Rolling Component Manufacturing Facility at Baramati,
facility at Baramati. Establishment of the Kalyani Production starts at Alstom-Bharat Forges new
Center for Technology and Innovation turbine and generator manufacturing facility in
India, Acquisition of Oil & Gas Machining
Company, Mcanique Gnrale Langroise
(MGL) in France
Source: Aranca Research, Annual Report, Company website
852
joint venture between Samvardhana Motherson Group and
800
Sumitomo Wiring Systems (Japan).
783
The company has evolved into a full system solutions provider and
700
715
caters to a diverse range of customers in the automotive and other
679
industries across Asia, Europe, the Americas, Australia and Africa.
668
600
Their product portfolio majorly involves wiring harnesses, rear view
mirrors, polymers and modules, elastomers, metal working, IT
566
engineering and design, and manufacturing support. 500
400
300
200
100
110
24
83
79
72
- 49
FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 E
Establishment of
Motherson Sumi
Systems Limited as International and domestic
a JV with Sumitomo expansion with more than 30
Wiring Systems. JVs and acquisitions.
ACMA AWARD
WINNERS
ACMA AWARD WINNERS
Excellence in Export
Excellence in Technology
Source: ACMA
Excellence in Manufacturing
Source: ACMA
USEFUL
INFORMATION
INDUSTRY ASSOCIATIONS
US$: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
Year INR Equivalent of one US$ Year INR Equivalent of one US$
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