White Paper – Automotive Industry Technology Cluster Manager (TCM) Technology Centre System Program (TCSP) Office of DC MSME, Ministry of MSME October, 2020 TCSP: Technology Cluster Manager White Paper: Automotive Industry Table of Contents 1 INTRODUCTION ......................................................................................................................................... 7 1.1 BACKGROUND .................................................................................................................................................. 7 1.2 OBJECTIVE OF WHITE PAPER ................................................................................................................................ 7 2 SECTOR OVERVIEW .................................................................................................................................... 8 2.1 GLOBAL SCENARIO ............................................................................................................................................. 8 Structure of Automotive Industry ............................................................................................................ 9 Global Business Trends .......................................................................................................................... 10 Product and Demand ............................................................................................................................. 12 Production and Supply Chain ................................................................................................................. 14 Regional Development ........................................................................................................................... 16 Key Players and Strategic Directions ...................................................................................................... 19 2.2 INDIAN SCENARIO............................................................................................................................................ 21 Automotive Industry .............................................................................................................................. 21 Auto Component Industry ...................................................................................................................... 22 Evolution of the automobile sector ........................................................................................................ 23 Growth trends ........................................................................................................................................ 24 Foreign Direct Investment (FDI) in India ................................................................................................ 26 Production and Consumption trends ..................................................................................................... 27 Regional analysis ................................................................................................................................... 28 Government Schemes and Policies ........................................................................................................ 29 Automotive Industry post COVID-19 ...................................................................................................... 31 Towards Atmanirbhar Bharat ............................................................................................................ 32 3 CHALLENGES BEING FACED BY THE SECTOR ............................................................................................... 34 3.1 SWOT ANALYSIS OF AUTOMOTIVE SECTOR IN INDIA .............................................................................................. 34 4 EMERGING TECHNOLOGIES IN THE SECTOR ............................................................................................... 40 4.1 EMERGING MEMORY TECH ............................................................................................................................... 40 4.2 LOW IMPACT MATERIALS .................................................................................................................................. 40 4.3 DIGITAL FACTORIES THROUGH SMART AUTOMATION ............................................................................................. 40 4.4 HIGHLY ACCELERATED LIFE TESTS (HALT) ............................................................................................................ 42 4.5 WEARABLE TECHNOLOGIES ............................................................................................................................... 42 4.6 SMART MATERIALS .......................................................................................................................................... 43 4.7 MULTI-MATERIAL 3D PRINTING AND ADDITIVE MANUFACTURING ........................................................................... 43 4.8 INDUSTRIAL INTERNET OF THINGS (IIOT) AND CONNECTIVITY ................................................................................... 43 4.9 SMART ROBOTS AND COBOTS ............................................................................................................................ 44 4.10 AUGMENTED REALITY AND VIRTUAL REALITY ........................................................................................................ 45 4.11 PREDICTIVE ANALYTICS ..................................................................................................................................... 47 4.12 LIGHT WEIGHTING - SHIFT TO MAGNESIUM FROM STEEL AND ALUMINUM ................................................................. 47 4.13 ELECTRIC VEHICLES (EV) – EMERGING TECHNOLOGIES AND CAPACITY BUILDING ACTIVITIES .......................................... 47 4.14 ENERGY STORAGE SOLUTIONS ........................................................................................................................... 49 4.15 TRENDS IN TOOLING TECHNOLOGY ..................................................................................................................... 49 5 RECOMMENDATIONS................................................................................................................................ 53 5.1 RECOMMENDATIONS FOR TCS AND MSMES ........................................................................................................ 54 5.2 TECHNOLOGY ADOPTION ROADMAP FOR SMES .................................................................................................... 62 5.3 SUGGESTED POLICY INTERVENTIONS ................................................................................................................... 63 © 2020 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2 Document classification: KPMG Confidential TCSP: Technology Cluster Manager White Paper: Automotive Industry 6 ANNEXURES .............................................................................................................................................. 65 6.1 ANNEXURE I ................................................................................................................................................... 65 6.2 ANNEXURE II .................................................................................................................................................. 65 6.3 ANNEXURE III ................................................................................................................................................. 66 6.4 ANNEXURE IV ................................................................................................................................................. 67 List of Figures FIGURE 1: PYRAMIDAL STRUCTURE OF THE AUTOMOTIVE INDUSTRY ............................................................................................. 9 FIGURE 2: MEGATRENDS AND SUCCESS FACTORS FOR AUTOMOTIVE ACTORS ................................................................................ 10 FIGURE 3: KIFAG-CATEGORIZATION OF VEHICLE COMPONENTS AT BMW .................................................................................. 12 FIGURE 4: ELECTRIC CAR COMPONENTS ................................................................................................................................. 13 FIGURE 5: MODULAR BUILDING BLOCK STRATEGY FOR SYNERGY GENERATION IN THE VW GROUP ..................................................... 13 FIGURE 6: CLASSICAL PRODUCT LIFE CYCLE, SOURCE: BMW GROUP, PISCHINGER & SEIFFERT 2016 ................................................ 15 FIGURE 7: THE NESTED GEOGRAPHIC AND ORGANIZATIONAL STRUCTURE OF THE AUTOMOTIVE INDUSTRY ........................................... 16 FIGURE 8: CENTERS OF AUTOMOBILE PRODUCTION ACROSS THE GLOBE ....................................................................................... 18 FIGURE 9: SHARE OF EACH SEGMENT IN TOTAL PRODUCTION VOLUME (FY19) .............................................................................. 22 FIGURE 10: AUTO COMPONENT WISE SHARE ........................................................................................................................ 22 FIGURE 11: EVOLUTION OF AUTOMOBILE SECTOR IN INDIA ......................................................................................................