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Automotive industry in India

The    in India is one of the largest in the world and one of the fastest growing globally. India manufactures over

11 million vehicles (including 2 wheeled and 4 wheeled) and exports about 1.5 million every year. It is the world's second largest

manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. India's passenger car and commercial vehicle

manufacturing industry is the seventh largest in the world, with an annual production of more than 2.6 million units in 2009. In 2009,

India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea and Thailand.

As of 2009, India is home to 40 million passenger vehicles and more than 2.6 million cars were sold in India in 2009 (an increase of

26%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile

Manufacturers, annual car sales are projected to increase up to 5 million vehicles by 2015 and more than 9 million by 2020. By

2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.

A chunk of India's car manufacturing industry is based in and around the city of Chennai, also known as the "

 
". with

the Indian city accounting for 60 per cent of the country's automotive exports. Gurgaon and Manesar near New Delhi are hubs

where all of the Maruti Suzuki cars in India are manufactured. The Chakan corridor near Pune, Maharashtra is another vehicular

production hub with General Motors, Volkswagen/ Skoda, Mahindra and Mahindra,Tata Motors in the process of setting up or

already set up facilities. Ahmedabad with Tata MotorsNano plant and Halol with General Motors in Gujarat, Aurangabad in

Maharashtra, Kolkatta inWest Bengal are some of the other automotive manufacturing regions around the country.

History

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of

increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti

Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to

the further expansion of its domestic automobile market which has attracted significant India-specific investment by

multinational automobile manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000 units and

has since grown rapidly to a record monthly high of 182,992 units in October 2009. From 2003 to 2010, car sales in India have

progressed at a CAGR of 13.7%, and with only 10% of Indian households owning a car in 2009 (whereas this figure reaches 80% in

Switzerland for example ) this progression is unlikely to stop in the coming decade. Congestion of Indian roads, more than market

demand, will likely be the limiting factor.

The first car ran on India's roads in 1897. Until the 1930s, cars were imported directly. Embryonic automotive industry emerged

in India in the 1940s. Following the independence, in 1947, the Government of India and the private sector launched efforts to

create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively

slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the

automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still
a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A

number of foreign firms initiated joint ventures with Indian companies.

In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles.

It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the

economic liberalisation in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies

launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic

and export demands.

Supply Chain of Automobile Industry

Supply Chain of Indian Automobile Industry

The supply chain of automotive industry in India is very similar to the supply chain of the automotive industry in Europe and

America. The orders of the industry arise from the bottom of the supply chain i. e., from the consumers and go through the

automakers and climbs up until the third tier suppliers. However the products, as channeled in every traditional automotive industry,

flow from the top of the supply chain to reach the consumers. Automakers in India are the key to the supply chain and are

responsible for the products and innovation in the industry.

The description and the role of each of the contributors to the supply chain are discussed below.

Third Tier Suppliers: These companies provide basic products like rubber, glass, steel, plastic and aluminum to the second tier

suppliers.

Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. They work on

designs provided by the first tier suppliers or OEMs. They also provide engineering resources for detailed designs. Some of their

services may include welding, fabrication, shearing, bending etc.

First Tier Suppliers: These companies provide major systems directly to assemblers. These companies have global coverage, in

order to follow their customers to various locations around the world. They design and innovate in order to provide ³black-box´

solutions for the requirements of their customers. Black-box solutions are solutions created by suppliers using their own technology

to meet the performance and interface requirements set by assemblers.

First tier suppliers are responsible not only for the assembly of parts into complete units like dashboard, breaks-axel-suspension,

seats, or cockpit but also for the management of second-tier suppliers.

Automakers/Vehicle Manufacturers/Original Equipment Manufacturers (OEMs): After researching consumers¶ wants and needs,

automakers begin designing models which are tailored to consumers¶ demands. The design process normally takes five years.

These companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second

tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry. Examples of these companies

are Tata Motors, Maruti Suzuki, Toyota, and Honda. Innovation, design capability and branding are the main focus of these

companies.

Dealers: Once the vehicles are ready they are shipped to the regional branch and from there, to the authorised dealers of the

companies. The dealers then sell the vehicles to the end customers.

Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or

directly to customers.

Service Providers: Some of the services to the customers include servicing of vehicles, repairing parts, or financing of vehicles.

Many dealers provide these services but, customers can also choose to go to independent service providers.

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 Ford dealership in Ho Chi Minh City, Vietnam (August 2005)

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In Australia and New Zealand, the popular Ford
Falcon has long been considered the average family
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car and is considerably larger than the Mondeo,
 

Ford's largest car sold in Europe. Between 1960 and

1972, the Falcon was based on a U.S. model of the same name, but since then has been entirely
designed and manufactured in Australia, occasionally being manufactured in New Zealand. Like
its General Motors rival, the Holden Commodore, the Falcon uses a rear wheel drive layout. High
performance variants of the Falcon running locally built engines produce up to 362 hp (270 kW).
A ute (short for "utility," known in the US aspickup truck) version is also available with the same range of
drivetrains. In addition, Ford Australia sells highly tuned limited-production Falcon sedans
and utes through its performance car division, Ford Performance Vehicles.

In Australia, the Commodore and Falcon have traditionally outsold all other cars and comprise over 20%
of the new car market. In New Zealand, Ford was second in market share in the first eight months of 2006
with 14.4 per cent. More recently Ford has axed its Falcon-based LWB variant of its lineup - the Fairland
and LTD ranges, and announced that their Geelong engine manufacturing plant may be shut down from
2013. They have also announced local manufacturing of the Focus small car starting from 2011.

However, with the acquisition of a stake in Japanese manufacturer Mazda in 1979, Ford began selling
Mazda's Familia and Capella (also known as the 323 and 626) as the Ford Laser and Telstar, replacing
the European-sourced Escort and Cortina.

In Australia, the Laser was one of Ford Australia's most successful models, and was manufactured in
Ford's Homebush plant from 1981 until the plant's closure in September 1994. It outsold the Mazda 323,
despite being almost identical to it, due to the fact the Laser was manufactured in Australia and Ford was
perceived as a local brand.

In New Zealand, the Ford Laser and Telstar were assembled alongside the Mazda 323 and 626 until
1997, at the Vehicle Assemblers of New Zealand (VANZ) plant in Wiri, Auckland. The Sierra wagon was
also assembled in New Zealand, owing to the popularity of station wagons in that market.

Through its relationship with Mazda, Ford also acquired a stake in South Korean manufacturer Kia, which
built the (Mazda-based) Ford Festiva from 1988±1993, and the Ford Aspire from 1994-1997 for export to
the United States, but later sold their interest to Hyundai (which also manufactured the Ford Cortina until
the 1980s). Kia continued to market the Aspire as the Kia Avella, later replaced by the Rio and once
again sold in the US.

Ford's presence in Asia has traditionally been much smaller, confined to Malaysia, Singapore, Hong
Kong, the Philippines, and Taiwan, where Ford has had a joint venture with Lio Ho since the 1970s. Ford
began assembly of cars in Thailand in 1960, but withdrew from the country in 1976, and did not return
until 1995, when it formed a joint venture with Mazda called Auto Alliance.

Ford India began production in 1998 with its Ford Escort model, which was later replaced by locally
produced Ford Ikon in 2001. It has since added Fusion, Fiesta, Mondeo and Endeavour to its product
line.

On 9 March 2010, Ford Motor Co. launched its first made-for-India compact car. Starting at 349,900
($7,690), the Figo is Ford's first car designed and priced for the mass Indian market.

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Îc is a wholly owned subsidiary of the Ford Motor Company in India. Ford India
Private Limited's head quarters are located in Chengalpattu, Chennai, Tamil Nadu. It currently is the 6th
largest car maker in India after Maruti Suzuki, Hyundai, Tata, Mahindra andChevrolet.

History

Ford Endeavour

Ford Fiesta

The modern Îc began production in 1996, although the roots trace back to
1907 when the Model A was launched. Its manufacturing facilities are in Maraimalai Nagar near Chennai.
Ford India Private Limited began production in 1926, but was shut down in 1954. Production began again
with the joint venture Mahindra Ford India Limited (MFIL) in October 1995, a 50-50 venture with Mahindra
& Mahindra Limited. Ford Motor Company increased its interest to 72% in March 1998 and renamed the
company Ford India Private Limited.

Manufacturing Facilities

FIPL's main manufacturing plant has a capacity of 100,000 vehicles annually and is located inMaraimalai
Nagar, 45 km from Chennai. As its new hatchback Figo was launched in March 2010. Ford Motor
Company has invested $500 million to double capacity of the plant to 200,000 vehicles annually and
setting up a facility to make 250,000 engines annually.
Models

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1. Ford Ikon (Launched 1999)

2. Ford Endeavour (Launched 2004)
3. Ford Fiesta (Launched 2005)
4. Ford Figo (Launched 2010)

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Ford received initial quality survey award from J.D Power and Associates in year 2007.
‡ One of the best known brand in the world.
‡ The online Web site of ford attracts at least 11 million people annually.
‡ Ford motors develop vehicles under several names.
‡ Manufacturing facilities in more than 30 countries.
‡ Ford motors sales better quality vehicles.
‡ Good relations with employees by offering better work environment and competitive wages.
‡ Ford supports racing teams which include NASCAR, Formula One and etc
‡ 39th on the Best Companies for Minorities List
‡ Sell vehicles in majority of countries.
‡ Ford always develop cars on standardized procedure.
‡ Alliances with Suzuki and Isuzu Motor Companies
‡ Technological Alliances with Toyota and Honda Motor Companies.

‡ Ford sold the UK based Jaguar and Land Rover companies and brands to Tata Motors of India in March 2008.
‡ The company sales are dropped in 2008 as compared to year 2007.
‡ Ford fired number of employees due to outsourcing.
‡ Firestone Tire recalls caused Stock Price to bear 14.70, Lowest in Years.
‡ Due to the diversity factor, it might lose focus on some lines
 
‡ Produce fuel efficient Cars in the upcoming years.
‡ Produce Hybrid cars in upcoming years.
‡ Invest on electric, hybrid and solar energy Vehicles.
‡ They have a change to become more environment friendly company.
‡ Enter into the Asian market.
‡ Joint ventures with other major competitors to combat recession.
‡ Initiate manufacturing operating in low cost countries.
‡ Giving more charities

 
‡ Rapid changes in fuel prices.
‡ Government regulation outside US.
‡ Long lasting recession in majority of countries.
‡ Hard competition from other motor vehicle companies like Toyota, TATA motors and etc.
‡ Variation in currency rates.
‡ Threats of substitutes
‡ Due to the recession ford face tough time to please its investors and employees.