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Indian Automobile Component Sector Report
Cni Research Ltd, June 2011, Pages: 61
The Indian auto component industry has been navigating through a period of rapid changes with great élan. Driven by global competition and the recent shift in focus of global automobile manufacturers, business rules are changing and liberalisation has had sweeping ramifications for the industry. The global auto components industry is estimated at US$1.2 trillion. The Indian auto component sector has been growing at 20% per annum since 2000 and is projected to maintain the high growth phase of 15-20% till 2015.
The Indian auto component industry is one of the few sectors in the economy that has a distinct global competitive advantage in terms of cost and quality. The value in sourcing auto components from India includes low labour cost, raw material availability, technically skilled manpower and quality assurance. An average cost reduction of nearly 25-30% has attracted several global automobile manufacturers to set base since 1991. India's process engineering skills, applied to re-designing of production processes, have enabled reduction in manufacturing costs of components. Today, India has become the outsourcing hub for several global automobile manufacturers.
A recent ACMA report puts the turnover of the auto component industry at about US$ 26 billion in 2010-11, up 18 per cent from US$ 22 billion in 2009-10. The report states that 40 per cent of the auto component industry was dominated by body and structural products in 2009, 20 per cent by engines and exhaust, and 10 per cent each by suspension and braking parts, transmission and steering parts, electronics and electrical and interiors. By 2015, body and structural will account for 35 per cent of the auto component industry, engines and exhaust 20 per cent, suspension and braking parts, transmission and steering parts and electronics and electrical will account for 13 per cent each and interiors 9 per cent.
Poised to grow by over four-fold to US$ 113 billion by 2020, the Indian auto component industry is one of the front runners for grabbing the global auto components outsourcing market. The total passenger car production in the country will jump four times to reach 9 million cars by 2020, according to Automotive Component Manufacturers' Association (ACMA). Although a major chunk of this will come from the fast growing domestic market, exports are likely to form around 35 per cent of the total market by 2020.
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