25-05-2012, 05:09 PM
Lumax Auto Technologies
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Auto Components Industry
The auto components industry in India has come a long way since its initial days pioneered by Telco (now Tata
Motors) in 1945. The industry received a big thrust with the setting up of Maruti Udyog Limited in 1981. In the
1980s the two-wheeler segments also received a thrust with the government allowing the private sector to set up
joint ventures like the Hero Group with Honda and TVS Group with Suzuki. With de-licensing of the industry in
1993 global automotive companies such as Toyota, GM, Ford, Honda and Hyundai found their way into the Indian
automotive industry. The Indian automobile components industry is an example of a successfully nurtured infant
industry, says the 2005 UNDP Human Development Report. The sector is emerging as the next big business
opportunity for Indian companies as global original equipment manufacturers (OEMs) hike procurement plans
and domestic companies expand.
India has gradually become a sourcing hub for auto companies worldwide. Among the companies outsourcing
from India are General Motors, Ford, Daimler Chrysler, Hyundai, Fiat, Toyota, Delphi, Navistar, Visteon, Cummins
and Caterpillar.
Classification of Automotive Components
An automobile consists of more than 20,000 components, with each performing a different function. On the basis of
product characteristics and functions, Original Equipment Manufacturers (OEMs) classify automotive components
into six categories as the following table shows. This classification for India is done by Automotive Component
Manufacturers Association (ACMA).
Lumax Auto Technologies Limited
• The organized sector of the industry is fragmented. According to ACMA, the number of automotive
components manufacturers in India total 480 — of which sales of only 38 companies fall in the US$ 50-500
million category, 220 companies fall in the US$ 5-50 million category and 222 companies fall in the
US$ 1-5 million category.
• The un-organized sector is also very large and includes counterfeits of reputed brands, a host of local
brands and the reconditioning of old components.
The India Advantage (Source:ACMA)
The domestic auto industry has a strong correlation with the GDP growth. The GDP has been growing at
approximately 7% over the last three years and is expected to touch 8% growth in the coming years. This augurs
well for the auto industry, which in turn should boost the Indian auto component industry. India has a strong
competitive advantage to become a preferred base for outsourcing as compared to countries like China and the
Philippines. India’s strength lies in the following:
• highly skilled and educated workforce and primarily English-speaking engineers and managers
• Low cost skilled labour: A skilled person in Europe can earn as much as $29 per hour while skilled labour
in India earn as low as euro 5 per day