Automobile & Auto Components
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Manufacturing unit for Automobiles (Passenger Car/ Two Wheeler/ Three Wheeler/ Commercial Vehicle) Automobile & Auto components Government of Gujarat Contents Project Concept 3 Market Potential 4 Growth Drivers 7 Gujarat – Competitive Advantage 8 Project Information 9 - Location/ Size - Infrastructure Availability/ Connectivity - Raw Material/ Manpower - Key Players/ Machinery Suppliers - Potential collaboration opportunities Project Financials 12 Approvals & Incentives 13 Page 2 Project Concept Indian Auto Industry Overview Auto and auto components industry in India is growing and maturing at a fast pace in terms of size, model variants and technological advancements in new cars. Some of the factors attributable to this growth include a buoyant end-user market, improved consumer sentiment and return of adequate liquidity in the financial system. The Indian auto-components industry can be classified into - organised and unorganised sectors. The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high- value precision instruments, while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category. Indian Auto and Auto Components Industry Classification Automobile Commercial Passenger cars Two-wheeler Three-wheeler vehicles (CV) Commercial Cars Motorcycles Light CVs purpose Passenger Medium and Utility vehicles Scooters carrier heavy CVs Multi Purpose Mining Mopeds vehicles equipment and earth movers Auto components Suspensio Lighting Engine and Powertrain n and and Accessorie engine Others parts braking other s parts parts equipment Sources: http://www.ibef.org/industry/autocomponents-india.aspx Page 3 Market Potential Global Market Overview Passenger vehicle density expected to become 1.5 times by 2020: India has the largest population of young people in the world, auto markets. Owing to its unique demographic dividend, the with around 66% of population under the age of 35. The Indian auto industry has immense growth potential. India’s country’s low vehicle penetration (32 vehicles per 1000 people passenger vehicle parc of around 29 million during 2015 is in 2015) makes it one of the world’s most attractive expected to grow to more than 48 million vehicles by 2020. World passenger vehicle density (Personal vehicles per ‘000 801 driving population) 765 611624 545547 393 369 350 326 192 169 159184 184 102 32 48 World Brazil Russia India China Japan North Western Eastern 2015 2020 America Europe Europe ► India has emerged as an important automotive market and offers huge growth potential due to low vehicle penetration and improving economic fundamentals ► The auto sector is one of the most ► Over the years, the Indian auto industry important contributors to GDP and has emerged as one of the world’s largest, employment in India, with huge potential with annual sales of 19.8 million vehicles in for growth. The sector accounts for 7% of FY15. It is also one of the fastest growing India’s GDP, 45% of manufacturing GDP auto markets, with production of 23.4 and employs about 19 million people both million vehicles in FY15 and a leading directly and indirectly. Further, the sector position in several sub-segments. contributes around 4.3% to India’s total exports and 13% to the country’s excise revenues. World’s largest Tractor manufacturer World’s 2nd largest Two-wheeler (2W) manufacturer World’s 5th largest Heavy truck manufacturer World’s 6th largest World’s 7th largest Passenger vehicle (PV) manufacturer Current ranking (FY15) Commercial vehicle (CV) Manufacturer Sources: Automotive Mission Plan 2016–26 (AMP 2016–26), LMC Automotive, EY analysis Page 4 Market Potential Indian Auto Industry overview The auto sector is one of the India’s major sectors, accounting for around 7.1% of the country’s GDP, 45% of the country's manufacturing GDP, 8% of the country’s R&D expenditure and employs about 19 million people both directly and indirectly. Further, the sector contributes around 4.3 % to India’s total exports and 13 % to the country’s excise revenues. India was the world’s 6h largest motor vehicle/car manufacturer (2015)and the world’s 2nd largest two-wheeler manufacturer. India Auto Industry trends Indian automobile industry (million units) Indian auto component industry (INR million) 23.4 24.0 20.4 20.6 21.5 17.9 19.8 20.5 2,348 17.4 17.8 18.4 2,160 2,117 15.5 1,883 2,046 1,386 685 427 526 614 189 303 FY11 FY12 FY13 FY14 FY15 FY16 FY10 FY11 FY12 FY13 FY14 FY15 Production Domestic sales Total turnover Exports Over the years, the Indian automobile industry The Indian auto component industry comprises has emerged as one of the world’s largest, with around 700 organized players and a few annual sales of 20.5 million vehicles in FY16. It thousand unorganized players, with its size is also one of the fastest growing auto markets, estimated at INR2.3 trillion in FY15. The with production of 24.0 million vehicles in FY16 industry grew at 11% in in FY15 due to and a leading position in several sub- recovery in domestic demand and exports. segments. India Auto Industry outlook India's passenger vehicle market is expected to hit 10 million units by 2020 and its share in the global passenger vehicle market is expected to increase from 2.4% in 2014-15 to 8% in 2020. Overall, the Indian automobile market is expected to become the world's 3rd largest by 2020. Employment and Skill Development in Auto Industry With the rising industry growth, the Indian automotive industry is likely to witness an increased demand for skilled labour in the coming years, as the economic environment improves and investments are made as part of the “ Make in India” initiative. The automotive sector is expected to create 15 million direct jobs by 2022 across the country. Exchange rate used: USD/INR: 64.0240 (2015 calendar year average) Page 5 Market Potential Auto industry in Gujarat ► Gujarat is emerging as a key investment destination for the major auto players. The state is set to become the country's automotive hub within the next few years. ► Gujarat government plans to increase the share of automotive industries in its overall engineering output to 10% by 2020, from the current 3.7%. ► Gujarat expects to surpass the production capacity of top car manufacturing states like Haryana, Maharashtra and Tamil Nadu, with an installed capacity to roll out 10 lakh units annually within the next 3-4 years. ► Incremental manpower requirement in Gujarat for the manufacturing of engineering goods is expected to be 53,580 during 2017-22. Gujarat Auto Cluster Particular Symbol Existing Auto Clusters Emerging Auto Clusters in SIRs by 2015 Emerging Auto Clusters in SIRs by 2020 Special Investment Region (SIR) Large auto clusters being developed near Rajkot and Ahmedabad 500+ auto 4–6 emerging 2–3 emerging component Auto clusters will be Auto clusters will be manufacturers in the developed near developed near Rajkot Rajkot district Ahmedabad Planned investments (as on January 2015) Company Investment (INR billion) Location Maruti Suzuki 40 Ahmedabad Hero MotoCorp. 11 Halol Honda Motorcycle and 10 Mandal Scooter India (HMSI) Key existing facilities Company Investment (INR billion) Location General Motors India ~20 Halol Tata Motors ~30 Sanand Ford ~60 Vadodara Sources: http://www.siamindia.com/cpage.aspx?mpgid=16&pgid1=17&pgidtrail=76 http://www.acma.in/docmgr/ACMA_Presentation/ACMA_Presentation.pdf http://www.ey.com/Publication/vwLUAssets/EY-making-india-a-world-class-automotive-manufacturing-hub-1/$FILE/EY-making-india-a-world-class- automotive-manufacturing-hub.pdf http://www.ey.com/IN/en/Industries/Automotive/Mega-trends-shaping-the-Indian-passenger-vehicle-industry Page 6 Growth Drivers In India, the passenger vehicles are expected to increase at a CAGR 1 Growth in of 18%, two- and three-wheelers at a CAGR of 8% and commercial automobile sales vehicles at a CAGR of 19%, during 2014-2021. It is estimated that total electric vehicles sales would amount to 6-7 Million units by 2020. GoI has launched several policies to support the growth of the auto industry such as Automotive Mission Plan (AMP) 2016–26, the 2 Favourable constitution of NATRiP, National Mission for Electric Mobility 2020, government etc. The AMP envisages four-fold growth by FY26., with the Indian policies auto sector generating up to INR 19.2 trillion in annual revenue by 2026, creating around 65 million additional jobs and contributing to more than 12% to India’s GDP. Currently, there are 30 private automotive R&D centres in India. 3 India emerging as Other private players, such as Hyundai, Suzuki, GM, are also keen to a global R&D hub set up R&D base in India due to a strong education base and comparative cost advantages. Gujarat government is planning to set up three clusters for precision engineering companies at Sanand, Halol and Hansalpur. 4 Setting up of new In addition, Suzuki is setting up a manufacturing facility near engineering/ auto Bechraji, with an investment of INR 18500 Crore. The company facilities in Gujarat expects to generate direct employment for over 2,000 people while the ancillary units in the vicinity and a supplier park will generate additional employment. At present there are more than 15 engineering clusters and new ones are emerging at Sanand-Viramgam, Mandal-Becharaji, Halol-Savli, Focus on skill 5 Anjar and Santhalpur. With these, there is considerable focus on development in engineering manpower and skill-set development – there are 54 engineering, 106 clusters diploma colleges with over 82,000 seats and 253 ITI institutes. The state has also initiated a model of skill formation training with industries. Exchange rate used: USD/INR: 64.0240 (2015 calendar year average) Source http://timesofindia.indiatimes.com/business/india-business/Parent-Suzuki-not-Maruti-will-build-Gujarat-plant/articleshow/50226852.cms Page 7 Gujarat - Competitive Advantage Skill development and training in auto sector is a focus area for Gujarat Government Gujarat is a hub of Industrial automation COE Manufacturing Government engineering industry, with and engineering focus to in Mehsana.