1. Why and How are Indian
automobile companies
capitalizing on Indian
advantages for expanding
internationally
Group 6
Alok|Anirban|Gautam|Sanjay|Shifaz|Sudeep|Suruchi

2. SM II - Group Project, Group 6, Section C

3. Export Orientation of the Indian Automobile Sector
CAGR growth of 31% between 2001-02 and 2007-08
05%
11%
66%
18%
SM II - Group Project, Group 6, Section C

4. Production, Domestic Sales and Export of CV’s in India
Production, Domestic Sales and Export of PV’s in India
SM II - Group Project, Group 6, Section C

5. Exploit Indian competitiveness as a Global Automotive
production hub
Attractive domestic
Political & Business
market & proximity to
environment
other markets
Automotive
hub
Low production cost & Technological capabilities
efficient supply chain in a particular class of
management vehicles
SM II - Group Project, Group 6, Section C

6. Growing demand
Growing demand Inviting Increasing
Policy Support Resulting in
investments
Rising Goal of establishing
Rising investments
incomes, young India as an Auto-
from domestic and
population manufacturing hub
foreign players
Greater availability R&D Focus; GOI has
Greater innovation
of credit and set up technology
in products; market
financing options modernization fund
segmentation
Strong growth in Policy sops, FDI Strong projected
exports as well encouragement demand making
returns attractive
SM II - Group Project, Group 6, Section C

7. Favourable government policies
Auto Policy 2002
o Automatic approval for foreign equity investment up to 100 per cent; no minimum
investment criteria
o Encourages R&D by offering rebates on the R&D expenditure spent by the
companies
Automotive Mission Plan 2006–2016
o Setting up of a technology modernization fund focused on SMEs
o Automotives training institutes
Dept of Heavy Industries & Public
o Worked towards reduction of excise duty on small cars and the increase of
budgetary allocation for R&D
o Weighted increase in R&D expenditure to: 200 per cent from 150 per cent (in-
house); 175 per cent from 125 per cent (outsourced)
SM II - Group Project, Group 6, Section C

8. NATRiPs
o Set up at total cost of USD 388.5 million to enable the industry to implement global
standards
o R&D centers of excellence with focus on low-cost manufacturing and product
development solutions
Union Budget FY11
o Surcharge on domestic companies reduced to 5 per cent from 7.5 per cent
o Reduce excise duty on development & manufacturing of hybrid vehicle kits to
5 per cent from the existing 10 per cent
SM II - Group Project, Group 6, Section C

9. Competitive advantage of India over its peers
SM II - Group Project, Group 6, Section C

10. Global demand shifting to smaller cars
General Motors, Nissan, Toyota
have announced plans to make
India has built up the scale and significant
India their hub for new global
competencies and cost advantages in the
small car platforms
production of small cars.
Light vehicle sales in India are
It benefits from lower development and labour
estimated to cross the 3 million
costs, and improving auto component
mark by 2012
manufacturing base.
Strong export potential in ultra
low cost cars segment (to
With most global players targeting the most developing and emerging
competitive, small car segment, increasing markets)
localization remains critical for OEMs to
establish profitable business given the
competitive intensity in the small car
segment .
SM II - Group Project, Group 6, Section C

11. Emergence of large automotive clusters
Gurgaon, Manesar, Utt
arkhand, Faridabad
Pune, Nasik, Sana
nd, Satara, Ahmed Jamshedpur, Hooghly
nagar
Hosur, Mysore
Pithampur, Nagpur
SM II - Group Project, Group 6, Section C

12. 42% of the sales came
from the European
markets.
Witnessed a
considerable drop in
exports of 6.3% in FY11
because of the European
market remaining
challenging on account
of withdrawal of
scrappage incentives
SM II - Group Project, Group 6, Section C

13. Reasons for expansion:
o Intensifying domestic expansion
o Decrease dependency on the static domestic market
It then started exploring alternate markets such as :
Thailand, Hungary, Malaysia, Laos, Lebanon, Algeria, Chile, Netherlands, Indonesia
and Sri Lanka.
• Exported entry-level models across the globe to over 120 countries.
• The A-Star (sold in Europe as the ‘Alto’, in some as ‘Celerio’) has been the star
performer abroad and has been named as the 5th World Strategic model by
Suzuki. Other successful exported cars are the Alto K10 (fuel efficient), Estillo,
Ritz and Zen. The company also entered into an agreement with Nissan, under
which the latter sells the same car in Europe as the ‘Pixo'.
• To handle the higher volumes, the company tied up with the Adani group for a
dedicated car terminal at Mundra port, Gujarat where they invested Rs 100
crores.
• Invested heavily in R & D activities in Japan to come up with technological
innovations like K-Series of engines and i-GPI technology.
SM II - Group Project, Group 6, Section C

14. Exports accounted for 28.5% of the company’s total net sales
Distribution network covers 50 countries
SM II - Group Project, Group 6, Section C

15. Presence abroad:
Bajaj Auto International Holdings BV (BAIH BV)
- a 100% Netherlands based subsidiary of Bajaj Auto
- formed to focus on international ventures, including possible acquisitions
PT Bajaj Indonesia (PT BAI)
- Majority owned subsidiary of BAL
- focuses on network development, sales and after sales services and brand
building
The company is currently on the look out for sites for assembly plants as it cuts
the import duties (Import duty is higher on a CBU compared to a SKD and CKD.
AIM to export 2 million units in the coming 2 to 3 years
SM II - Group Project, Group 6, Section C

16. EXPORTS VOLUME
4000
3500
3000
2500
2000
EXPORTS VOLUME
1500
1000
500
0
Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12
March 2011 March 2010 YTD March F10 YTD March F11
DOMESTIC TOTAL 35488 29944 286713 358021
M&M EXPORTS 2034 1754 10567 17138
Logan Exports 1000 1904
SECTOR TOTAL 37522 31698 298280 377063
SM II - Group Project, Group 6, Section C

17. M&M is has entered several markets in developing economies such as South
America, South East Asia and Africa.
M&M leverages its Indian cost advantage to grow in the international market.
Cheap Labor and Cost of Production allows M&M to export CKDs to international
markets and sell them at much lower price tag.
M&M is manufacturing world-class products at a competitive prices which allows the
firm to fulfill its global ambitions and compete in overseas markets.
Basically M&M is entering those markets where the requirements, both in terms of
Quality and Price, are similar to those in India.
M&M Ties-up with local manufacturers to leverage their capabilities in local markets.
M&M has recently acquired Ssangyong Motor Company[SYMC] in Korea
M&M has collaborated with Eljuri Group in Ecuador in November 2011
XUV 500 [SUV] and Genio [Pick-up trucks] were launched recently for Indian as well as
International markets in September 2011
Earlier M&M had entered the Nigerian market with its 3-wheelers Alfa Passenger and
Alfa Load
SM II - Group Project, Group 6, Section C

18. In 2010-11, exports contributed to
6.51% of total revenue
Total export 58089 vehicles, a
growth of 70%
CV’s 50,244, a growth of 80.2%
PV’s 7,845, a growth of 25.9%
Extended presence in the European market
o 21% stake in Hispano Corrocera
o MoU with Fiat in 2005
o Acquired a 94.3% stake in INCAT International for R&D support and IT capabilities
Joint Venture with Marcopolo
o 51:49 joint venture company with Brazil's Marcopolo to manufacture and
assemble fully-built buses and coaches in India
o To be marketed not only in India but also in all Tata Motors focused markets
SM II - Group Project, Group 6, Section C

19. Acquisition worth $ 2.3billion from Ford Motors in 2008
TML felt that acquiring JLR would help them acquire a global
footprint
It would help them enter high-end premier segment of the global
automobile market
Provide access to the latest technology which would also help
them improve their core Indian products
Expected decrease in dependence on Indian market
Tata Motors and MG Rover inked this deal in December,2002
City Rovers manufactured in Tata Motors Pune plant were marketed
by MG Rover in the UK and US markets
Why did Tata Motors go for this deal:
- to enhance the volume throughput of the Indica’s Pune plant
- was seen as an endorsement by a major international
company of Tata Engineering’s capabilities in general, and the
world-class acceptability of the Indica in particular
SM II - Group Project, Group 6, Section C

20. Exports to Over
115 countries
Fastest to the 1
million mark
66% of total
passenger car
export
Santro, i10, i20
and Accent
SM II - Group Project, Group 6, Section C

21. Hyundai’s 50:50 rule
The company usually relies on export markets for 50% of its sales and on the
domestic market for the balance 50%.
For instance, in calendar 2008, HMIL's total sales was 4.89 lakh units. Of this, 2.43
lakh units were exported. In 2009 calendar year, the company targeted a sale of 5.52
lakh vehicles, of which 2.75 lakh units are for export markets.
"We are in the process of changing this 50:50 business mix. In 2010, we plan to sell
55% of our total vehicles in the domestic market and export the balance.”
- Arvind Saxena, director (marketing and sales), HMIL
Europe accounts for nearly 60-70 % of HMIL's total exports.
Most recent destination to be added: Australia with offering of i20
SM II - Group Project, Group 6, Section C

22. Pursue aggressive volume growth to be
among the top 10 global players in trucks
and top 5 in buses
The CIS countries and particularly, Ukraine
value highly the hallmarks of Ashok
Leyland vehicles, reliability and
ruggedness.
The Asian, African and LatAm countries
have grown at the rate of 8% even as the
global economy grew at only 5%.
Last years’ results boosted by a
buoyant Sri Lankan economy and
improved performance in SAARC
countries
SM II - Group Project, Group 6, Section C

23. Participants in the Bus Rapid Transport(BRT) system in Laos, Nigeria
Has set up manufacturing facilities in Letnany Czech Republic for producing its
Avia Line of trucks with the latest technology and compliant with stringent
emission norms
Has a 28% equity stake in the Lanka Ashok Leyland company, a venture with the
Sri Lankan Govt. to supply CBU and CKD units
Acquired a 26% stake in Optare Plc., UK , a reputed bus manufacturer with
experience in Hybrid and Electric Vehicles
State of the art bus manufacturing facility at UAE, a JV between Ras Al Khaimah
Investent Authority and Ashok Leyland
SM II - Group Project, Group 6, Section C

24. Initiatives by Indian CV manufacturers to increase exports
Tata Motors in June 2011 exported its new range of Prima World Trucks to South
Africa and Middle East on a trial basis. The company expects to increase its export
sales in the segment in the current fiscal.
M&M is likely to launched the electric version of its mini truck Maxximo in October
2011. The two-cylinder diesel mini truck Maxximo has a payload capacity of 850
kilograms, although its electric variant has lesser capacity of around 600 kilograms.
M&M is looking to export its Maxximo electric to Europe and the US.
Ashok Leyland has formed a JV with Nissan to manufacture LCVs and plans to start
production from the second half of 2011. The JV will launch a LCV which has a
payload capacity of 1.5 tonne and a gross vehicle weight of 3 tonnes. The JV plans to
export around 30 per cent of its production to Asian markets.
M&M in its joint venture with Navistar plans to exports busses (7.5-25 GVW) which
will built at the company's Chakan plant and trucks to right-hand drive markets such
as South Africa.
SM II - Group Project, Group 6, Section C

25. Challenges to India’s export competitiveness
Growth in input costs
Slowdown in external demand in Europe and USA
Production cuts in lieu of slowdown
Growing competition from Chinese manufacturers
Changing consumer preferences
Infrastructure constraints
Human resource challenges
SM II - Group Project, Group 6, Section C