The Indian automotive industry: growth and opportunities
By UK India Business Council (UKIBC)
India has emerged as one the largest and fastest growing automotive markets in the world, particularly strong in subsectors like light passenger and commercial vehicles, two wheelers and automotive components.
India: Component industry turnover In US $ bn
This rapid growth and evolving strengths in R&D and supply chain in the country are creating fantastic opportunities for engineering and manufacturing companies. In view of this, most large international players have already entered or are taking bold steps to enter the market.
For this monthly Advanced Engineering Sector View, our strategic partners, PwC, have kindly contributed their insights into the Indian autiomotive sector. Below you will find an update and upcoming trends in the light vehicle and auto components subsectors.
Light vehicle
Light Vehicle assembly volume has grown from 0.7m, in 2001, to 3.5m in 2011 and is expected to grow to 7.5m by 2018 (11% CAGR). Most of the big OEMs are already in India or are in the process of setting up manufacturing facilities. Whilst Suzuki has the largest market share (in Light Vehicles), both Indian manufacturers (e.g. Tata, Mahindra) and international players (e.g. Hyundai, Toyota) have been gaining market share in recent times.
Vehicle sales volumes over the last few months also suggest that consumer demand is slowly shifting towards diesel powered ‘Utility vehicles’ being launched by automakers, especially products that are relevant to Indian market conditions. Demand from this year’s festive season may not match those of previous years and a far from optimistic growth forecast could dampen car sales in the short-term. However, the long-term structural growth drivers of the Indian automobile industry such as gross domestic product growth (leading to increasing affluence of rural and urban consumers), favourable demographics and low penetration levels, are intact. This is likely to support future growth.
Auto components
Over the last decade the Indian auto component industry has emerged as one of India’s fastest growing and globally competitive manufacturing sectors. The country’s auto component industry has also shown great advances in recent years in terms of quality, spread, absorption of newer technologies, skilled manpower at a reasonable price, and flexibility. Market realities in the US, Europe and other global markets now pose a significant opportunity for Indian component manufacturers to forge a new identity with clear strategies in R&D, supply chain and product diversification. The overall component industry has witnessed a compound annual growth rate of nearly 15% for the period 2007-11 and is expected to grow at 11% over the period 2011-21. Similarly while the growth rate of exports has been 11% during 2007-11, exports are expected to grow by nearly 19% during 2011-21.
For further details you may contact
Abdul Majeed- PwC India
abdul.majeed@in.pwc.com
Devean George – PwC UK
devean.george@uk.pwc.com
