DR N RAVICHANDRAN
PRESIDENT (OPERATIONS) LUCAS-TVS LTD

GLOBAL SCENARIO
The world’s automotive industry made over sixty million cars and commercial vehicles last year. These vehicles are essential to the working of the global economy and to the well-being of the world’s citizens. The world’s output of these vehicles is equivalent to a global turnover of 1.6 trillion Euro and if vehicle manufacturing were a ‘country’ it would be the sixth largest economy in the world. Building sixty million vehicle requires the employment of nearly 8 million people directly in making the vehicles and the parts that go into them. This is over 5% to 6% of world’s total manufacturing employment. In addition to these, direct employees, many times more are employed indirectly in related manufacturing and service provision. The automobile industry is also a major destination for innovation and investment over 66 billion euros in research, development and production. The auto industry plays a key role in the technology level of other industries and of society. It is also to be noted that the vehicle manufacture and use are also major contributors to Government revenues around the world.
The table-1 indicates the vehicle production and the growth percentage.

Table- 1 Global vehicle production
(1997-2005)

Source: OICA Statistics Committee, world ranking 2005

We see that an addition of 11 million vehicle production since 1997, a majority of this growth is coming from the Asia-Pacific region (excluding Japan). Whereas, in Europe, NAFTA and Japan, there is more or less stagnation in this period. Again a bulk of this increase from China – where production has trebled from 15.82 lakh units in 1997 to 46 lakh in 2005. The second country where growth is significant is India, where the production has doubled from 7.72 lakh units in 1997 to 15.76 lakhs in 2005. The third contributor to this growth is Thailand where it has increased it production level from 3.60 lakh units in 1997 to 8 lakh units in 2005.
Similarly, global motorcycle production has increased from 30 million units in 2003 to 40 million units in 2005 and Asia is the major producer of motorcycle in the world with 90% share. Even here, China accounts for 17 million units – India is at second position with 7.7 million units a year.
The industry being highly capital intensive, many global players are realigning their production bases coming closer to the consumption points which is in Asia-Pacific region – China, India and Thailand. There is also enormous pressure on cost reduction forcing many players in the field to outsource more components from low cost countries which gives excellent gateway for Indian Automotive Industry, linkage with world players. India, currently with our strength of growing domestic market, increasing middle class population associated with purchasing power, good corporate governance and well established financial market offers attractive base for the global companies to invest in India.
INDIAN AUTOMOTIVE INDUSTRY
The Indian automotive industry is clearly emerging as a technologically competent sector, capable of forging long-term alliances and partnerships with global OEMs and Tier-1 companies. We also see that Auto Industry is now being encouraged by the Government through various conducive policy framework. This is the reason why we see many complex and diverse forces coming together to work in tandem and there is continuous creation of opportunities for the Indian automotive industry.
The domestic vehicle industry continued its good run and achieved healthy growth of 15%. For the third consecutive year, exports of vehicles are growing year on year - recording 28% growth. This also resulted in significant growth of Auto component industry, growing by 15% year on year, and crossing US$ 10 billion mark in 2005-06. Clearly we see after delicensing in 1991, auto industry has spectacular growth, and 17% over the last three years and attained a turnover of Rs.1,65,000 Crores. More than, Rs.50,000 Crores have been invested in this sector and another Rs.40,000 Crores are in the pipeline.
In India, auto industry provides direct and indirect employment to around 1.6 crores of people and it contributes around 20% in terms of indirect taxes – but, with all these, our share in the global market is only 2.37% against the world’s production level of 67 million. Our Export is 0.3%. We should capitalise on our capabilities in really leaving our footprints around the world. The major growth drivers are as below.

The Indian auto industry is projected by 2016 around US$ 130 billion which may include around U$ 35 billion for exports. This growth rate promises significant employment opportunities for the Engineers, Management specialists, Workers (Skilled and Un-skilled). However, to make this happen, we need to understand our competitiveness and improve significantly. The table indicates the key factors.

THE CHALLENGES AHEAD
The future challenge for Indian automotive industry would be to develop a supply base with emphasis on

	Economies of scale
	Lower costs
	Development of technical & human capabilities
	Method to overcome infrastructural bottlenecks
	Exploiting global opportunities
	World Class Quality
	Innovative Products
	Flexibility

Many companies in India have demonstrated even with many constraints, It is possible to be competitive and preferred source by demonstrating excellence in the areas of product innovation, process innovation, just-in-time methodology, Quality levels and flexibility.
Days are not far off for Indian Automotive Industry will be making their presence around the globe?