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Indian Automobiles Industry: an overview

October, 2013


With the increasing growth in demand on back of rising income, expanding middle class and young population base, in addition to a large pool of skilled manpower and growing technology, will propel India to be among the world's top five auto-producers by 2015.

India is also one of the key markets for hybrid and electric medium-heavy-duty trucks and buses.

India is an extremely important market for Hyundai. The Indian automobile sector is poised for steady and strong growth in the future. The Indian automobile industry holds good growth potential for the mid-term and long term horizon, as per Mr Bo Shin Seo, MD and CEO, Hyundai Motor India Ltd (HMIL).

Moreover, Ford Motor Co plans to convert India into global production centre for compact cars, once its Sanand plant in Gujarat comes on stream in 2014, under a project codenamed B562 that may induce three different compact cars from the same platform.

Key Statistics

The Indian automobile industry produced a total 1.69 million vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in August 2013 as against 1.56 million in August 2012, registering a growth of 8.18 percent over the same month last year.

The cumulative foreign direct investment (FDI) inflow into the Indian automobile industry during April 2000 to July 2013 was recorded at US$ 8,932 million, amounting to 4.5 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce.

The overall automobile exports grew by 2.03 per cent during April-August 2013. Furthermore, the production of passenger vehicles in India was recorded at 3.23 million in 2012-13 and is expected to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012-2021, as per data published by Automotive Component Manufacturers' Association of India (ACMA).

Major Developments & Investments

  • Hero MotoCorp plans to establish 20 manufacturing and assembly facilities to expand its presence across 50 countries by 2020
  • Nissan Motor India, the Indian unit of Japanese auto maker Nissan Motor Co Ltd, has entered into an agreement with Ennore Port Ltd (EPL), to export at least 60,000 cars a year through the port for the next 10 years
  • TVS Motor Co plans to launch two new motorcycle models in the Kenyan market. These motorcycles will be specific to the Kenyan markets in terms of usability, reliability and durability. Moreover, the firm also plans to set up a two-wheeler assembly line in Uganda and will also launch two motorcycle models in the African nation
  • HMIL has invested US$ 2 billion in two state-of-the-art passenger car manufacturing facilities in India. Moreso, India contributes 25 per cent of the firm’s global sales
  • Mahindra & Mahindra (M&M) plans capital expenditure and investments worth Rs 10,000 crore (US$ 1.63 billion) over the next two years
  • Maruti Suzuki India Ltd (MSIL) is setting up an operational integrated research & development (R&D) centre in Rohtak, Haryana. The test tracks at the new facility would be longer and considerably enhanced in technical capabilities than the ones at the Suzuki Motor Corp (SMC) facility in Japan
  • Tech Mahindra has signed an agreement with Volvo Car Corporation. The IT company will provide Volvo with a service to maintain and develop a range of applications that can increase efficiency and reduce costs
  • Isuzu Motors India plans to start contract manufacturing of its sports utility vehicles (SUV) and pick-up trucks at Hindustan Motors' (HM) Chennai plant from December 2013
  • Daimler India Commercial Vehicles (DICV) has expanded its network across the country. The company plans to establish dealership facilities in over 100 identified locations across India by 2014