The Indian Automotive Market – Positioning for Growth

The Indian Automotive Market – Positioning for Growth

The automotive industry in India is one of the largest in the world with an annual production of 23.37 million vehicles in FY 2014-15, following a growth of 8.68 per cent over the previous year. The industry accounts for ~7% of the country's GDP. The 2-wheeler category accounts for a significant portion of the automotive market with an ~80% market share, the bikes being a popular choice amongst booming middle class families and youth. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of that sector. The overall passenger vehicle (PV) segment has a 13 per cent market share and is expected to grow as India’s large middle class transitions.

The auto industry produced a total 19.84 million vehicles in April–January 2016, including passenger vehicles, commercial vehicles, three-wheelers and two-wheelers; up from 19.64 million in April-January 2015. Domestic sales of passenger vehicles grew by 8.13% in April–January 2016 as compared to the same period the year prior. Within the passenger vehicles category, passenger cars rose by 10.18%, during April–January 2016 over April–January 2015.

The domestic sales of commercial vehicles increased by 9.43% in April–January 2016 as compared to the previous year. Sales of medium & heavy commercial vehicles (M&HCVs) increased by 30.19%.

India is a prominent auto exporter and has strong export growth expectations for the near future. In FY 2014–15, automobile exports grew by 15% over the previous year.

The Government of India encourages foreign investment in the automobile sector and allows 100% FDI under the “automatic” route.

Some of the major initiatives taken by the Government of India include:

  • The government of India aims to make automobile manufacturing the main driver of "Make in India" initiative, as it expects the passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.
  • In the Union budget of 2015–16, the Government has announced plans to provide credit of Rs 850,000 crore (US$127.5 billion) to farmers, which is expected to boost sales in the tractors segment.
  • The government plans to promote eco-friendly cars in the country—i.e. CNG-based vehicles, hybrid vehicles, and electric vehicles—and also mandate 5 per cent ethanol blending in petrol.
  • The government has formulated a Scheme for Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India, under the National Electric Mobility Mission 2020, to encourage the progressive introduction of reliable, affordable, and efficient electric and hybrid vehicles into the country.
  • The Automobile Mission Plan (AMP) for the period 2006–2016, designed by the government is aimed at accelerating and sustaining growth in this sector. Also, the well-established Regulatory Framework under the Ministry of Shipping, Road Transport and Highways, plays a part in providing a boost to this sector.

abas is positioned to serve Indian automotive clients

The majority of India's car manufacturing industry is evenly divided into three "clusters". Near Mumbai, Maharashtra, along the Chakan corridor near Pune, is the western cluster, with a 33% share of the market. Audi, Volkswagen, and Skoda are located in Aurangabad. Mahindra & Mahindra and have an SUV and engine assembly plant at Nashik. General Motors, Tata Motors, Mercedes Benz, Land Rover, Jaguar Cars, Fiat, and Force Motors have assembly plants in the same area.

This attracts lots of automotive suppliers in and around Pune to use sophisticated automotive technology. Technology will enable this midsize market to communicate with automotive leaders smoothly in their day-to-day manufacturing requirements.

Automotive Manufacturers (OEM) deal with tier 1, tier 2 or sometimes even with tier 3 suppliers depending on their procurement requirement. This requirement changes frequently depending on market needs.

abas ERP offers seamless automotive utility to communicate procurement requirements from automotive vendors to tier 1, tier 2 and tier 3 vendors.
The abas automotive tool addresses all following requirements for automotive vendors in India.

  • EDI communication (monitor and converter via partner)
  • Standard processing: VDA, EDIFACT, ODETTE
  • Shipping papers according to the respective standards
  • Mapping of typical processes, such as:
    • Forecast delivery schedule/JIT delivery schedule
    • Administration of blanket orders
    • Continuous change index administration
    • Histories: Forecast delivery schedule history, delivery history, price history
    • Invoices, credit notes, and payment advice notes in electronic form
    • Packing materials management
    • Container management with load carried account statement
    • Shipping planning with picking
    • ESP processing (consignment stock)
    • Combined production

Integrated automotive utility with abas ERP enables automotive suppliers to plan production effectively and deliver on time to OEMs.

Contact us to learn more about these and a host of other benefits abas can provide! abas has offices both in Mumbai and Pune to cater the automotive component manufacturing clients in the region and around India.
Please contact us directly at +91 99201 96444, abas Force India Pvt. Ltd.