Ca 4229118

The Indian Automotive Industry
A Perspective
TATA Motors Organisation Structure
Global Auto Industry An Analysis
Overview of Indian Economy
Indian Auto Industry

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
Indian Auto Component Industry
Emerging Opportunities
2
Organization Structure TATA Motors

Senior Management Team
R N Tata
R N Tata
(Chairman
(ChairmanTata
TataMotors)
Motors)
Ravi
RaviKant
Kant
(Managing Director)
(Managing Director)
A P Arya
A P Arya
(President Heavy and Medium
(President Heavy and Medium
Commercial Vehicles
Commercial Vehicles
PPMMTelang
Telang
(President
(President Light
Lightand
and
Small
SmallCommercial
Commercial
Vehicles)
Vehicles)
P P Kadle
P P Kadle
(ED Finance &
(ED Finance &
Corporate Affairs)
Corporate Affairs)
Rajiv Dube
Rajiv Dube
(Sr Vice President Passenger
(Sr Vice President Passenger
Cars)
Cars)
Engineering
Engineering
Research Centre
Research Centre

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
4
World Vehicle Production Trends (in '000s)

Asias share of the
world vehicle
production is growing
significantly..
70000
60000
50000
40000
30000
20000
10000
0
1997
1998
1999
2000
2001
2002
2003
2004
Year
Source : OICA.net
North America
South America
European Union
Other Europe
Japan
Asia-other than Japan
Data excludes 2-wheelers where Asia is not only the largest producer, but is also the largest market
State of the Global Automotive Industry
Stagnant Sales except in Asia

Over Capacity in most Regions
Intense Product & Price Competition
Industry Margins Under Pressure
Most of Industry EVA negative
Global Focus to Asia for growth

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
7
INDIA : An Introduction
India
USA
Population
1080 million
296 million
States
28
50
(+ 7 Union Territories)
(+14 dependent areas)
Geographical Area
3.3 mn sq km
9.6 mn sq kms
GDP - Nominal
US $ 0.67 trillion
US $ 11.73 trillion
US $622
US $ 3080
US $39,935
US $ 39,496
Per Capita Income - Nominal:

Per Capita Income
:
(at Purchasing Power Parity)
Estimates for 2004
Current Exchange Rate: 1 USD = INR 45
Sources: IMF Data, The World Factbook, CIA
Exchange Rate (PPP) : 1 USD = INR 10 (approximately)

8
Real GDP (USD Billion)

600
6.9%
5.4%
After decades of
indifferent
growth, Indias
economy is
accelerating in
the new
millenium..
500
400
586
548
473
5.8%
300
279
3.0%
200
100
0
3.2%
159
4.2%
60
1950
86
1960
118
1970
1980
1990
2000
2003
2004
Year
1950
1960
1970
1980
1990
2000
2003
2004
Per capita GDP (USD)

600
6.9%
3.6%
Rapid increase in
population in the
last fifty years
have negated the
impact of
economic growth
in the past
500
400
300
546
511
466
3.6%
328
0.7%
0.8%
200
2.2%
199
216
231
1970
1980
164
100
0
1950
1960
1990
2000
2003
2004
Year
1950
1960
1970
1980
1990
2000
2003
2004
10
Goldman Sachs
predicts India to
be the third
largest economy
in the world in
absolute terms
by 2025
Indian Economy
already ranks 4th
in the world in
terms of GDP
adjusted for
Purchasing Power
Parity
%
RANK
COUNTRY
GDP
(Purchasing Power Parity)
1
2
3
4
5
6
7
8
9
10
United States
China
Japan
India
Germany
United Kingdom
France
Italy
Brazil
Russia
11,750,000,000,000
7,262,000,000,000
3,745,000,000,000
3,319,000,000,000
2,362,000,000,000
1,782,000,000,000
1,737,000,000,000
1,609,000,000,000
1,492,000,000,000
1,408,000,000,000
GDP Growth Forecast
India
Brazil
China
Russia
(*) Estimates for 2004

Source : The World Factbook - CIA
11
Indias Demographic Dividend
India has one of the

youngest population
amongst all nations
Source: The World Factbook, CIA
Although it is the most populous country, because of Beijings long-standing one-child policy,
Chinas working age population will begin to decline in the next 10 years. Meanwhile, Indias
youthfulness - 350 million citizens are under age 15 - ensures its workforce will expand for decades,
potentially enabling it to outstrip Chinas economic pace through sheer weight of numbers.
Time Magazine, Issue dated Dec 05, 2005
12
India has transitioned from a predominantly agrarian to a service-based economy in

line with the growth trajectory followed by major developed economies..
The Indian Economy is
now more broad-based
and thus resilient..
Sources:
Statistical Outline of India 2004-05
13

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
14
Automobile production in India has doubled in 4 years, with growth seen across all
four major segments..
By numbers, two wheelers
are the dominant segment
of the Indian Automotive
market
15
In many ways, the Indian Automotive Market is unique

Harsher operating conditions pose unique challenges for product
conceptualization, design and development:
Road inadequacy and quality
High Traffic density
Poor Fuel quality & variety (Gasoline, Diesel, CNG & LPG)
Manufacturing complexity higher despite lower volumes compared to

global standards
Large product portfolios
Product obsolescence policies not articulated and enforced, entailing

longer product life.
Firms able to maintain profitability even at low volumes.
16
Personal Mobility is positively correlated to per capita GDP
17
India is expected to achieve mass motorization status in 2014
Inhabitants/Vehicle
Vehicle Density vs. GDP/capita

India in
2002
100
Developing Markets
Mature Markets
Inhabitants/Vehicle
02
China in 2002
India in 2014
50
China in 2014
10
Mexico
South Korea
Brazil
Poland
Argentina
Czech Spain
Republic
2
$1,000
15
India
100
China
82
Germany
Canada
Australia
Italy
20
Belgium
Austria
UK Sweden
Japan
USA
France
25
30
35
40
Per Capita Income (US$ 000)
Note:
The above includes both Passenger Vehicles and Commercial Vehicles
Sources: Wards Auto Yearbook 2002, EIU, Goldman Sachs BRICs report, DRI 2002, A.T. Kearney analysis
18
Key Challenges facing the industry

Increasingly Stringent Emission &
Safety Regulations
Technological capability
Cost
Increase in input prices

Ferrous & Non-Ferrous Metals
Crude oil & derivatives
Natural rubber
Transition of Emission & Safety Regulations for Vehicles

India
YEAR
Emission Regulation
Metro Cities
Rest of Country
2000
BS 2 (Euro II)
BS 1 (Euro I)
Underbody Protection Devices

Advance Warning Triangles
2005
BS 3 (Euro III)
BS 2 (Euro II)
Spray Suppression, Noise

Norms, Headlamp levellers
2009
BS 4 (Euro IV)
BS 3 (Euro III)
ABS, Pedestrian Protection

(Expected)
Rising Customer Expectations

Product features
Quality & reliability
Safety Regulation
Integration with Global Markets

Lowering product life cycles
Reducing time-to-market for new
products
Threat of new competition
19

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
20
2-Wheeler Production & Market Sub-Segments (Nos.)

CAGR 15%
8,000,000
Within 2-Wheelers, Motorcycles

contribute 80% of the segment size
1,209,654
7,000,000
989,560
6,000,000
723,330
935,279
5,000,000
669,719
986,208
848,434
4,000,000
640,934
3,000,000
937,506
879,759
5,193,752
4,355,168
3,876,175
2,000,000
2,906,323
2,183,785
1,000,000
0
2000-01
2001-02
Motorcycles
2002-03
Year
Scooters
2003-04
2004-05
Moped
21
Indian 2-Wheeler Market

Competitive Scenario
Motorcycle
50%
30%
13%
4%
1%
2%
<1%
<1%
15%
28%
2%
46%
9% <1%
82%
8% 10%
Figures denote Mkt Share (Apr-Oct 05)
India is now the second

largest two-wheeler
market in the world
22
The Indian 2-Wheeler Industry
Indian 2-wheeler Industry
Similarity with Global Industry
Characteristics
Large variety of products & choice for the customer

(9 manufacturers, 70+ Models)
Basic transportation necessity as against fun & fashion

orientation of the Western Markets. (Primary transportation
vehicle for entire families)
Dis-similarity with Global

Industry
Product design & execution driven by economy rather

performance and power
Presence of strong home-grown players competing against
Global majors.
23
Key Market Drivers

Increasing disposable incomes
Key Trends
Eclipse of scooter segment
Low operating cost

Higher fuel efficiency of Newgeneration motorcycles
Greater reliability resulting in low
maintenance cost
Emergence of new motorcycle subsegments

Economy
Low interest rates translating to low

financing and acquisition costs
hence greater affordability.
Inadequate urban & rural public
transportation infrastructure
Executive
Performance
Shrinking product life-cycles
Ease of use in congested city

centres
24

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
25
3-Wheeler Production (Nos.)

CAGR 17%
400,000
Predominantly used for commercial

purposes, for both Goods Transport
(40%) and Passenger Transport (60%).
350,000
300,000
250,000
200,000
356,223
150,000
100,000
374,414
276,719
203,234
212,748
50,000
0
2000-01
2001-02
2002-03
Year
2003-04
2004-05
Three Wheeler
26
Indian 3-Wheeler Market

Sub-segments and Competitive Scenario
Sub
Segments
60%
Scooters
India
68%
24%
2%
1%
3%
3%
23%
40%
12%
13%
7%
6%
Passenger
40%
Goods
India is the largest threewheeler market in the world
27
The Indian 3-Wheeler Industry
Indian 3-wheeler Industry
Characteristics
None.
Product unique to emerging markets in South / South-East

Asia & parts of Africa
Industry
Product design & execution focus on technological

simplicity and ease of use.
Lesser competitive intensity as compared to other segments.
28
Key Market Drivers

Last Mile Transportation needs.
High product maneuverability &
driveability. Ideal for congested
Indian roads and tropical
conditions.
Key Trends
Goods segment growing at faster
clip.
Ability of product to meet

increasingly stringent emission &
Inadequate urban & rural public

Low initial ownership cost
Self-employment opportunity for
large segment of urban youth
safety regulations is doubtful.
Market push building up for product

upgradation.
29

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
30
Passenger Vehicle Production & Market Sub-Segments (Nos.)

CAGR 17%
1,400,000
Unlike the USA, the Indian Passenger

Vehicle market is dominated by Cars
(79%)
1,200,000
67,371
181,778
1,000,000
60,673
146,325
800,000
51,441
600,000
0
127,519
63,751
114,479
105,667
960,505
782,562
400,000
513,415
200,000
500,301
557,410
(*)
0
2000-01
2001-02
(*) MPVs were part of Passenger Car segment till 2000-01
Passenger Cars
2002-03
Year
Utility Vehicles
2003-04
2004-05
Multi-Purpose Vehicles
31
Indian Passenger Vehicle Market Competitive Scenario
Passenger
Cars
52%
17%
19%
1%
5%
2%
2%
2%
1%
<1%
<1%
Utility
Vehicles
2%
18%
1%
42%
21%
1%
10%
1%
<1%
4%
<1%
Multi
Purpose
Vehicles
100%
<1%
4th largest Passenger Vehicle Market

in Asia
32
The Indian Passenger vehicle Industry

Indian Passenger Vehicle
Industry
Characteristics
Multiple segmentation across & within major segments
Cars (A, B, C, D & E segments) (Hatchbacks, Sedans, Notchbacks, Station
Wagons & Saloons)
Utility Vehicles (Multi- & Sports Utility)
Large variety of products & choice for the customer

(13 manufacturers, 50+ Models)
Market dominated by Mini Cars & Hatchbacks (>80%)
High incidence of taxes in Car Prices.
(24% Excise Duty, 12.5% VAT, Local Taxes as applicable)

Industry
Customer preference driven by value for money and cost of

ownership considerations rather than image, performance and
power.
(80% of cars sold are priced below USD 12000)
Large proportion of chauffer driven cars. Rear Passenger comfort
is a critical influence in purchasing decisions.
Emergence of strong domestic players (TATA, Mahindra).
Strong demand pull for Utility vehicles from Private Taxi segment.
33
Cars per thousand population
Passenger Car Penetration is low in India
The low penetration

presents an opportunity
for industry players to
offer an affordable fourwheeled alternative to
the mass of 2-wheeler
customers
34
Key Market Drivers

Increasing disposable incomes
Rising aspirational levels
Low interest rates.
Wide variety and easy
availability of Financing options.
High sensitivity to Fuel prices
Lack of urban & rural public
Key Trends
Market evolution from Mini
cars to Hatchbacks to
Compact Sedans now evident
Increasing customer emphasis

on aesthetics and comfort.
Shrinking product life-cycles
Flourishing Service Sector

35

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
36
Commercial Vehicle Production & Market Sub-Segments (Nos.)

CAGR 22%
400,000
Unlike most developed markets,

Indian Market has seen dominance
by Medium Commercial vehicles
350,000
300,000
138,890
250,000
108,917
200,000
83,195
150,000
68,922
65,756
211,143
100,000
50,000
166,123
87,784
96,752
120,502
0
2000-01
2001-02
2002-03
Year
Medium & Heavy Commercial Vehicles
2003-04
2004-05
Light Commercial Vehicles

37
Indian Commercial Vehicle Market Competitive Scenario
Medium &
Heavy CV Trucks
64%
24%
8%
3%
<1%
<1%
Buses L, M
& HCV
40%
30%
7%
5%
10%
6%
1%
1%
Light & Small

Comm Veh
Trucks
59%
<1%
32%
4%
3%
3%
<1%
TATA Motors dominates over 60% of the Indian Commercial Vehicle

Market. It is also the Worlds fifth largest Medium & Heavy commercial
vehicle manufacturer.
38
The Indian CV Industry
Indian CV
Industry
Similar with Global
CV Industry
Characteristics
Indian CV Industry
Cyclical
250
200
Dis-similar to
Global CV Industry
Secular long term growth trend

Lower Power to Weight Ratios
Early stage of road development
Less degree of product
sophistication.
Strong price entry barriers created
by domestic players
Nosin'000
150
100
CAGR: 5%
50
0
39
Key Market Drivers

Growth in Economic Activity
Road Network Development
Low interest rates.

Wide variety and easy availability of Financing options.
High sensitivity to Fuel prices
40
Indian CV Industry: Trucks

The growth of the Commercial vehicle industry is critically dependent on Infrastructure
development & economic activity
Impact of Road development
Dramatic impact
in initial stage of
road development
1000
900
Impact of GDP Growth.
900
Germany
800
Stage
Germany
800
Truck penetration
MHCV / m population
France
700
Truck penetration
MHCV / m population
Gradual
impact
1000
Stage
UK
600
Turkey
Spain
500
400
Australia
Russia
Argentina
300
Portugal
Brazil
200
India
100
China
South Africa
(AL)
Indonesia
India
1
0.5
1.5
France
UK
600
500
Portugal
400
Argentina
300
Hungary
Mexico
Romania
100
Spain
Brazil
200
0
0
700
China
South Africa
Indonesia
India
0
0
Road Density
Paved Highway (km) / Area (km2)
10
15
20
25
GDP per capita

1000 US$ / head
Source: VDA (German Automotive Association), Worldbank, DRI Automotive report

41
Road network development in India
Between 2003-04 to 2007-08 each year ~2000 Kms of 4-laned highways will be added
Golden
Quadrilateral
Year-wise completion schedule of NHDP

Planned length 14,000 km
2003
12%
NSEW
Corridors
Feeder
Roads
Completed
15%
2004
21%
2005-07
52%
Source: CrisInfac, NHAI
Impact on Domestic CV Industry

Faster turnaround
Increased freight movement
Lower operating cost of vehicles
Replacement demand
Between 1997 - 2002, Highway length in China increased by around 15,000 km and CV
volumes nearly doubled from 1.2 mn to 2.1mn
.. Indicative of future likely directions in Indian market
42
Key Trends
Migration from erstwhile Basic
MCV Workhorse to Hub &
Spoke Model
Average Power To Weight Ratios

Of Selected Countries
Europe
Increasing Power to weight

ratio
Increasing customer emphasis
on aesthetics and comfort.
Japan
Brazil
China
India
et n
k
ar i o
m cat
k ti
uc his
r
T p
so
Arrival of Global Players

Divergence in Truck and Bus
Technology
Focus on Fully Built Transport
Solutions
43

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
44
Automobile Component Business - India

(In USD Million)
CAGR 22%
9,000
The growth rate in Auto Components

business has kept pace with OEM
growth
8,000
1,400
7,000
1,020
6,000
760
5,000
578
4,000
625
7,300
5,710
3,000
4,670
2,000
3,340
3,892
1,000
0
2000-01
2001-02
2002-03
Year
Domestic
2003-04
2004-05
Export
45
Key Market Drivers

Linked to growth of OEM Industry
Key Trends
Indias emergence as low cost
global sourcing destination.
Highly sensitive to input cost

escalation.
Indian ancillary manufacturers are

shifting focus from global after-
Competitiveness driven by
Manpower Large pool of
qualified engineers & skilled
technicians at lower cost
Lower investment cost Through
appropriate, low cost automation.
market to global OEM supplies.

Firms focus on operational
excellence to improve quality &
reliability of products.
(8 Deming Award winners)
Increasing relevance of Global Tier

1 suppliers (Bosch, Denso, Visteon,
Delphi)
46
Rotating Auto
Electricals
Tyres & Tubes
Heavy Forgings
Wheel Rims
Small Castings &

Forgings
Medium
Low
Product Complexity
High
The Indian Auto component industry is now transitioning from

being a supplier for the global aftermarket to becoming a fullscale global Tier 1 supplier
Hand Tools
Metal bonded &
Moulded Rubber Parts
Aftermarket
itio
s
n
Tra
Plastic Components
ath
P
n
Tier 2-n supplier
Tier 1 supplier
Customer complexity
47
Indian Component suppliers are adopting different approaches

for Global expansion & growth
Exports from India

Suppliers of:
Castings
Forgings
Machined Items
Greenfield Overseas Locations
Rubber Items
Wheel Rims
Sundaram Fasteners: China

Minda Group: Indonesia
Overseas Acquisitions
Bharat Forge
(CDP-Germany; Federal ForgeUSA)
Sundaram Fasteners
(Cramlington Precision, UK;
Peiner-Germany)
48

Two Wheelers
Three Wheelers
Passenger Cars
Commercial Vehicles
49
Automobile Exports from India (Nos.)
CAGR
Overall 22%
Passenger Veh 57%
2-Wheelers 35%
700,000
International Business
growth presents a huge
opportunity, as well as
a challenge for the
Indian Automotive
Industry
600,000
500,000
29,949
17,432
129,291
400,000
12,255
300,000
200,000
166,413
66,801
68,144
72,005
13,770
27,112
16,263
11,870
366,724
53,165
15,462
100,000
111,138
43,366
265,052
179,682
104,183
0
2000-01
Two Wheelers
2001-02
Three Wheelers
2002-03
Year
2003-04
Passenger Vehicles
2004-05
Commercial Vehicles
50
Opportunities for the industry are emerging both in the areas of Automotive
Manufacturing and Engineering Services
Manufacturing:
Emerging World hub:
Small Cars (Suzuki, Hyundai)
Castings & Forgings
Regional Sourcing base

Aggregates for Entire Vehicle Programs
(e.g. Transmissions for Toyota IMV)
Globalisation opportunities for Indian

Manufacturers
Increasing exports of Made In India
vehicles
Establishing manufacturing facilities at
foreign locations (e.g. TVS Indonesia)
Contract Manufacturing (e.g. Sub-150cc
Bajaj motor cycles for Kawasaki)
Growth through Mergers & Acquisitions
(TATA Motors acquisition of Daewoo
Commercial Veh, Korea & Hispano, Spain
Engineering Services:
Indian IT Majors offering on-shore and
off-shore engineering services to Global
IT players.
(e.g. TCS, TATA Technologies, Infosys,
Satyam)
Global Auto & Auto component majors

putting up Development Centres in
India, either on their own or in
partnership with local players
(e.g. General Motors, Daimler Chyrsler,
Johnson Controls, Delphi, Bosch)
Independent Indian OEMs focusing on

upgrading their design & engineering
capabilities.
(e.g. TATA Motors European Development
Centre & Acquisition of INCAT plc, UK)
51
Thank You
52

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The Indian Automotive Industry

TATA Motors Organisation Structure

Global Auto Industry An Analysis

Overview of Indian Economy

Indian Auto Industry

Indian Auto Component Industry

Organization Structure TATA Motors

TATA Motors Organisation Structure

Global Auto Industry An Analysis

Overview of Indian Economy

Indian Auto Industry

Indian Auto Component Industry

World Vehicle Production Trends (in '000s)

Asia-other than Japan

State of the Global Automotive Industry

Stagnant Sales except in Asia

TATA Motors Organisation Structure

Global Auto Industry An Analysis

Overview of Indian Economy

Indian Auto Industry

Indian Auto Component Industry

(+14 dependent areas)

Per Capita Income - Nominal:

Current Exchange Rate: 1 USD = INR 45

Sources: IMF Data, The World Factbook, CIA

Exchange Rate (PPP) : 1 USD = INR 10 (approximately)

Real GDP (USD Billion)

Per capita GDP (USD)

GDP Growth Forecast

(*) Estimates for 2004

Indias Demographic Dividend

India has one of the

Source: The World Factbook, CIA

India has transitioned from a predominantly agrarian to a service-based economy in

TATA Motors Organisation Structure

Global Auto Industry An Analysis

Overview of Indian Economy

Indian Auto Industry

Indian Auto Component Industry

In many ways, the Indian Automotive Market is unique

Manufacturing complexity higher despite lower volumes compared to

Product obsolescence policies not articulated and enforced, entailing

Personal Mobility is positively correlated to per capita GDP

India is expected to achieve mass motorization status in 2014

Vehicle Density vs. GDP/capita

Per Capita Income (US$ 000)

Key Challenges facing the industry

Increase in input prices

Transition of Emission & Safety Regulations for Vehicles

Underbody Protection Devices

Spray Suppression, Noise

ABS, Pedestrian Protection

Rising Customer Expectations

Integration with Global Markets

TATA Motors Organisation Structure

Global Auto Industry An Analysis

Overview of Indian Economy

Indian Auto Industry

Indian Auto Component Industry

2-Wheeler Production & Market Sub-Segments (Nos.)

Within 2-Wheelers, Motorcycles

Indian 2-Wheeler Market