Duty Automotive

Duty Automotive

Driving Forces of India's Automotive and Auto Parts Sector

The automotive sector is one of India’s largest and fastest growing manufacturing sectors. With a turnover of US$13 B, the automobile sector employs about 0.45 million people directly and 10 million people indirectly, including after-sales and servicing networks. This ranked India as the 11th largest passenger car producer in the world. In the category of motorcycles and scooters, India is ranked 1st and 2nd respectively. With India increasingly liberalizing its market place, many new joint ventures evolved, resulting in close to 2 dozen global auto manufacturers setting up shop in India

The auto component segment is equally robust, supplying the entire range of parts required by the domestic automobile industry and currently employs about 250,000 people. Although small by global standards, this segment is growing rapidly as a result of its low costs and rising quality. Sales turnover of parts is estimated to have reached US$8.7 B in 2004/05, 29% higher than the previous year. Noticeably, auto component manufacturers supply to two kinds of buyers – original equipment manufacturers (OEM) and the replacement market. Over 300 small and medium companies directly service the OEMs assembling vehicles in India. Downstream, close to 5,000 other micro firms are working for these Tier 1 suppliers, as well as for the replacement market

The sector can be segmented into 2. One is the automobile segment. The other is the auto parts segment. The key manufacturing areas for these 2 segments are well spread across the country.

The growth of India’s automotive sector is driven by the key forces below:

Import

Automotive related imports are largely in auto parts, accounting for a lion’s share of 85%. These imports will feed the manufacturing plants, producing vehicles for domestic market as well as export market.

As the demand from the domestic market increases with rising affluence, production will increase in tandem, hence requiring more imports of parts, especially those of higher precision which still cannot be done in India. Global players in India still need to import fairly large amount of auto parts for their automobile assembly as quality and technological standards of auto parts sourced from within India may not meet their high standards. The expected Increase in exports of India-made vehicles will also contribute to import growth of auto parts.

Export

Automotive related exports expanded rapidly in recent years. Automobile exports grew at a compound annual growth rate of 46% between 2001 and 2006. Export share of production increased from 3% in 2001 to 8% in 2006. The growth is boosted by these several factors such as India’s cost competitiveness in terms of labor and raw material; established manufacturing base; economies of scale due to domestic market; potential to harness global brand image of the parent company, as well as the global hub policy for small cars like Hyundai, Suzuki, etc

Most automotive exports go to developing countries in Asia, where inexpensive cars can find a market. Egypt, Kenya and Nigeria are important destinations for India’s automotive exports. More recently, as the quality and technology of India-made automobiles have improved and met stringent requirement of the international market, some cars have found buyers even in Western Europe.

Similarly for auto parts, exports have been growing at a compound annual growth rate of 25% over 2000-2005. Share of exports in total production increased to 18% in 2005 from 10% in 1997. Foreign carmakers in rich countries are increasingly turning to India for parts, as low costs, relatively good technology base and access to cheap raw material make India highly competitive in its auto parts exports.

The main export markets are the USA, Germany, Japan, Sweden, the UK and Italy. Asia, Africa and the Middle East together take up 44% of India’s auto part exports.

Regulatory/Government efforts

Government efforts and regulatory frameworks are also key driving forces to the automotive industry in India. Currently, 100% foreign direct investment in the automotive industry, with no mandatory minimum level of investment is allowed. No local tie up is necessary since the sector has already been fully de-licensed and deregulated. This provides a strong impetus for global auto players to set up shop in India. Further, excise duty and custom taxes have also been kept competitive in order to make participation in the automotive industry conducive

On top of these, an Automotive Mission Plan 2006-2016 is also being drafted to develop the domestic sector, as well as the export market. It aims to develop India into a premier automotive hub. Moving forward, India targets to become one of the top 5 automotive economies by 2025

International Agreements

Trade/economic co-operation agreements between India and the region or other international markets will boost India’s exports of both automobile and parts to the region/international markets. Going forward, the potential agreements are: TVS Group’s plan to invest in Indonesia to manufacture 2-wheeler; FTA between India and ASEAN (negotiation in progress) would also offer opportunities for direct trade and investment between India and ASEAN countries; FTA with countries like China, Korea, Japan, Chile, etc

About the Author

Shu Wei Wong works as a planner/strategist. She writes just about anything that interest her or writes on issues highly related to her field of work, especially on strategy and leadership. Find more of her thoughts at http://360strategyleadership.blogspot.com/

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Heavy Duty Rear Shock by Crown Automotive $71.99 1993-98 ZJ Grand Cherokee;Factory length;Heavy-duty shock

Heavy-duty Rear Shock by Crown Automotive $30.99 1984-01 XJ Cherokee;Factory length;Heavy-duty shock

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Heavy-duty Front Shock by Crown Automotive $41.99 1984-01 XJ Cherokee;1993-98 ZJ Grand Cherokee;Factory length;Heavy-duty shock

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7'' Heavy Duty Automotive Logic Probe $41.95 A modern circuit tester with time tested durability. Quickly and safely tests high and low voltages (power and ground) on all vehicles, including computerized engine and body controls. ? Tests 6, 12, and 24 volt systems ? High impedance - current draw less than 18 milliamps to protect sensitive electronic sensors, microprocessors, electronic ignition components and air bags. ? Dual color LED indicates red for power (high) and green for ground (low) ? 6' heavy duty, 18 gage dual leads with large battery clips ? Leads can be attached regardless of polarity ? Includes Protect-A-Terminal? probe adapter to prevent damage to electrical connectors ? Can be used as a standard, single circuit tester. ? Instructions included. By Tool Aid.

3'' Heavy Duty Automotive Logic Probe $41.95 A modern circuit tester with time tested durability. Quickly and safely tests high and low voltages (power and ground) on all vehicles, including computerized engine and body controls. ? Tests 6, 12, and 24 volt systems ? High impedance - current draw less than 18 milliamps to protect sensitive electronic sensors, microprocessors, electronic ignition components and air bags. ? Dual color LED indicates red for power (high) and green for ground (low) ? 6' heavy duty, 18 gage dual leads with large battery clips ? Leads can be attached regardless of polarity ? Includes Protect-A-Terminal? probe adapter to prevent damage to electrical connectors ? Can be used as a standard, single circuit tester. ? Instructions included. By Tool Aid.

Shock Absorber by Crown Automotive for Jeep $89.99 Jeep Wrangler (2007-2009) with 3.8L & with Heavy Duty Supension (SDU); Front; Shock Absorber by Crown Automotive for Jeep

Rear Drive Shaft by Crown Automotive $400.99 1997-02 Jeep TJ Wrangler;Standard duty driveshaft;For use with SYE kit;16.5 in. Rear Drive Shaft by Crown Automotive

Automotive Diesel Techonology (Paperback) $161.63 Written by an experienced diesel technician, this book has an intensely practical approach to the most popular, current light and medium duty diesel engines rather than a theoretical or descriptive one. While most diesel books are directed to heavy-duty diesels used in less than 20% of all diesel engines produced, this book is directed to the 70%  market share of diesels used in light and medium duty applications. The technology enabling the use in this new generation of powerful automotive diesels is vastly different from heavy-duty diesels and requires its own unique coverage. Currently, this book is the only one available to serve the requirements of automotive technicians servicing these light-duty engines. Automotive techniciansand Diesel enthusiasts.

Shock Absorber by Crown Automotive $31.99 Jeep Cherokee (1984-2001); Heavy Duty Gas; Rear;

Jeep Heavy-duty Steering Box Bracket by Crown Automotive $180.99 1976-86 CJ with power steering;Designed to replace factory brackets JEEP CHEROKEE CHEROKEE (XJ) CJ5 CJ7 COMANCHE DJ5D DJ5F DJ5G DJ5L DJ5M GRAND WAGONEER J10 J20 SCRAMBLER WAGONEER CHIEF CUSTOM LAREDO LIMITED PIONEER S X XLS 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 2.1L Turbocharge Diesel (126) 2.5L (150) 2.5L (151) 2.5L Iron Duke LX8 (151) 2.8L (173) 2L (121) 3.8L (232) 4.2L (258) 5.9L (360) 5L (304) 6.6L (401) DIESEL GAS Jeep Heavy-duty Steering Box Bracket by Crown Automotive

Heavy Duty Front Coil Spring by Crown Automotive for Jeep $61.99 1984-01 Jeep XJ Cherokee;1986-92 Jeep MJ Comanche;Factory replacement JEEP CHEROKEE (XJ) COMANCHE BRIARWOOD CHIEF CLASSIC COUNTRY CUSTOM ELIMINATOR LAREDO LIMITED PIONEER SE SPORT X XLS 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2.1L Turbocharge Diesel (126) 2.5L (150) 2.8L (173) 4L (242) 4L Power Tech (242) DIESEL GAS Heavy Duty Front Coil Spring by Crown Automotive for Jeep

Acme Automotive Inflator Gauge With Heavy Duty 12'' Hose $35.95 ? Chrome-plated casting, brass internals, heavy duty valve and plated steel chuck? Straight-on tapered chuck inflator design? Comes with a 12'' heavy duty rubber hose? 1/4'' NPT female inlet? Easy to read and measures in 2 lb. increments? Commonly used on coin-operated tire inflators at gas stations

Acme Automotive ACMA1300 Inflator Gauge with Heavy Duty 12Hose $45.51 Chromeplated casting brass internals heavy duty valve and plated steel chuck. Straighton tapered chuck inflator design. Comes with a 12 heavy duty rubber hose. 1/4 NPT female inlet. Easy to read and measures in 2 lb. increments. Commonly used on coinoperated tire inflators at gas stations.

Heavy-duty Steering Box Bracket by Crown Automotive $180.99 1976-86 CJ with power steering;Designed to replace factory brackets

Heavy Duty Front Coil Spring by Crown Automotive $61.99 1984-01 XJ Cherokee;1986-92 MJ Comanche;Factory replacement