Auto Components2014 PDF

Prospects of Machine Tool Industry from Auto Component Industry
Contents
1.
2.
3.
4.
5.
Introduction
User Industry Analysis
Current Status and expectations from machine tool industry
Correlation between machine tool industry and Auto component industry
Opportunities for machine tool industry
Prospects of Machine Tool Industry from Auto Component Industry

1. Introduction
The Machine tool industry prospect mainly depends on the growth of the engineering sector. The user
sectors of machine tools are, the automotive, auto ancillaries, railways, defense, electrical, electronics,
telecommunication, textile machinery, ball & roller bearings and Consumer durables.
The following chart indicates the contribution of user industry segments to the machine tool industry.
User Industry Segmentation
Automotive
40%
Consumer Durables
20%
Engineering & Capital Goods
15%
Railways
10%
Deffence
10%
Others
5%
Demand for machine tools accrues from manufacturers of primary and intermediate goods. The
primary user industries include the automotive, capital goods and consumer durables sectors.
Prominent users of machine tools in the intermediate goods sector, include auto components, ball and
roller bearings and electronic components segments. Most of these segments recorded robust growth
in recent years
2. User Industry Analysis Auto Component Industry

The year 2013-14 was undoubtedly one of the most challenging ones for the automobile industry.
Both vehicle and auto component sales saw a decline during the fiscal year that ended in March 2014.
During 2013-14, Automotive Component Manufacturing industry recorded a decline of 2 per cent,
with overall turnover standing at Rs. 2,11,765 crores (USD 35.13 billion) against last year's 2,16,000
crores. The compound annual growth rate (CAGR) for the industry has been 14 per cent for the last six
years.
Auto Component Industry Turnover: 2008-09 to 2013-14

Source: ACMA
Key findings of the ACMA Industry Performance Review 2013-14
Exports: Exports grew by 16.7 per cent to Rs. 61,487 crores (USD 10.2 billion) from Rs. 52,690 crores (USD 9.7 billion)
in 2012-13. Europe is the leading marketplace with 38 per cent contribution, while the US topped the list of top
export destinations.
Key Export Items: Engine parts, transmission parts, brake system & components, body parts, exhaust systems,
turbochargers.
Imports: Imports of auto components grew by 3.6 per cent to Rs. 77,160 crores (USD 12.8), which is about 3 billion
dollars higher than exports. Asia and Europe contributed to 57 per cent and 34 per cent of imports, respectively.
Capital investment: The industry inspected a continuous year-on-year decline in terms of investment. While in 201011 almost USD 2 billion were invested, in 2011-12, it was in the range of USD 1.6-1.9 billion. It further dropped to
USD 1.26-1.75 billion in 2012-13, whereas in 2013-14, an investment of around USD 0.5-0.7 billion was witnessed in
the sector. The reason behind this was moderation in vehicle sales and depressed market sentiments.
Challenges for the auto component industry
High cost of capital impacting growth

Infrastructure Challenge & Cost: Roads, Ports, Power
Imports: Higher than exports
Building R&D competence and Ecosystem
3. Current Status and expectations from machine tool industry

Auto industry is starting to spend on expansion projects. CAPEX is in raising trend and investment is on focus.
Industry is planning for global expansion. During a recent interactive meeting with ACMA members a few suggestions
has been noted for the machine tool industry.
Improve reliability of Indian machines.

There is a big gap in Automation. Develop cost-effective automation solutions.
Eliminate skill requirement for machine operations
Focus on developing assembly equipment.
4. Correlation between machine tool industry and Auto component industry

There exist a strong relationship between Machine Tool industry and Auto Component industry. Performance of
Auto Component industry will affect the performance of machine tool industry. The demand for machines in India
and turnover of auto component in India shows a strong coefficient of correlation at 0.69. Correlation coffecient
ranges between -1 to +1, and correlation at 0.69 is considered as strong correlation between two sectors
ACMA industry could not grow in the desired path during last three years due to slowdown in the economy. As per
planned estimates demand for automobile components during FY14 is estimated at USD 60 but this was not realized
owing to slowdown in the economy. By 2020 ACMA has projected the demand for auto components is likely to grow
by USD 108-120 Bn, given the strong correlation between auto components and machine tools, demand for machine
tools is likely to grow at a healthy rate.
5. Opportunities for machine tool industry

According to ACMA, the Indian auto components industry is likely to grow to US$ 120 billion by
2020 with domestic market share of about US$ 85 billion. The Indian auto components
industry is well poised to achieve strong growth in the coming years owing to rising domestic
demand in the OEM market.
India fast emerging as hub for global vehicle programs industry projected to register double
digit growth
Demand for machine tools is estimated to increase to with the increased demand from auto
component industry.
Reference:
http://www.acma.in/
http://auto.ndtv.com/news/performance-review-indian-auto-component-industry-in-2013-14-589644
http://indiainbusiness.nic.in/newdesign/index.php?param=industryservices_landing/397/1

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Prospects of Machine Tool Industry from Auto Component Industry

Prospects of Machine Tool Industry from Auto Component Industry

Engineering & Capital Goods

2. User Industry Analysis Auto Component Industry

Auto Component Industry Turnover: 2008-09 to 2013-14

High cost of capital impacting growth

Building R&D competence and Ecosystem

3. Current Status and expectations from machine tool industry

Improve reliability of Indian machines.

4. Correlation between machine tool industry and Auto component industry

5. Opportunities for machine tool industry

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