The New Platform For Global Business Education Seminars


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GlobalAutoIndustry.com announced the launch of a new business portal, today, providing on-demand global business development seminars on a wide range of topics including Legal, HR, Supply Chain logistics, Manufacturing, M & A and Sales and Marketing, primarily for the Automotive sector.

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Don’t miss out on this amazing introductory offer.  Check out GlobalBusinessProfessor.com the new leader in on-demand global business education seminars.


Indian Auto Components Industry: Brief Introduction (and downloadable Report)


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Indian auto component industry is robustly driven by the growth in demand for automobiles. The sector has become a lucrative business proposition for global players, majorly owing to two factors. First, needless to say, the demand for automobiles is increasing day by day in the country. India, a market with high potential for the automobiles sector, is expected to witness a three-fold increase in demand for automobiles by 2020. Secondly, all major global auto-makers are establishing their bases here due to highly positive business environment, favourable policies and government support.

According to a study by UK-based global financial advisory firm-Rothschild, India would become the third largest auto industry by volumes after China and the US by 2015. This would give immense support to the growth of ancillary sector as well.

Major developments, investments and Government initiatives relating to the sector are discussed hereafter.

Indian Auto Components Industry Profile
According to a recent study by the Automotive Component Manufacturers’ Association of India (ACMA), original equipment manufacturers (OEMs) account for 41 per cent of the auto components consumed in the Indian aftermarket.

The study estimated current size of Indian components business at Rs 24,800 crore (US$ 4.87 billion), 49.7 per cent of which is formed by two-wheeler segment. Passenger vehicles, commercial vehicles and three-wheelers follow with 24.7 per cent, 23.1 per cent and 2.5 per cent of the share respectively.

According to Arvind Kapur, President, ACMA, a large market in Indian spares business is dominated by organised, semi-organised and a number of small, unorganised players. He thus acknowledged the need for a process of accreditation to ensure better customer service.

The study further projected that OEM-authorised network of service stations would account for 20-30 per cent of the Indian auto components market by 2017 while that of multi-brand organised service chains would grow to 5-10 per cent from 1-2 per cent. Similarly semi-organised service centres’ and unorganised garages’ market share would be 20-30 per cent and 45-55 per cent, respectively, in 2017.

India – The Global Auto Hub
Canada is looking for substantial investment opportunities in Indian auto components market through the comprehensive economic partnership agreement (CEPA) which is being discussed and negotiated by the two Governments. The agreement is likely to get finalised by 2013. If fructified, the agreement would facilitate an annual increase of economic output in two countries by almost US$ 6 billion and boost the two-way trade by 50 per cent.

UK sees immense potential in the Indian auto ancillary sector, especially in the city of Rajkot as it is known for auto components manufacturing. Peter Beckingham, British Deputy High Commissioner for Western India, also indicated possible ventures between UK and Rajkot companies in near future.

According to industry sources, Rajkot’s auto component industry, with over 500 manufacturers aggregating a net turnover of around Rs 1,500 crore (US$ 294.5 million), grows at an annual rate of 15-20 per cent.

Furthermore, 60 French automobile component suppliers are contemplating on business opportunities to set up a vendor park near Sanand in Ahmedabad district. The proposed vendor park would accommodate tier-1 and tier-2 auto-component suppliers who would supply spares to the recent auto entrants in the State and even to others.

Sanand is already home to a number of global auto-makers, like Ford and Peugeot.

Indian Auto Components Industry: Key Developments and Investments
Global private equity (PE) firm Actis PE has bought 10-13 per cent stake in Indian auto component manufacturer Endurance Technologies for about US$ 71 million. Endurance Technologies is a part of the automotive component major Endurance Group and caters to companies like Bajaj, Yamaha, Suzuki, Honda Motorcycles and Scooters and Royal Enfield. Global car makers such as Daimler, Audi, Fiat and Porsche are the company’s customers in passenger car segment.

German auto component maker Schaeffler Group is on an expansion spree in India. The company plans to invest over Rs 1,000 crore (US$ 196 million) during 2012-15 in the country to set up a manufacturing facility and to expand its existing plants. To support its growth, the company would also double the number of its engineers and recruit 1, 200 employees in the country.

Federal-Mogul’s new facility in Chennai will commence its operations by March 2012. The plant, being set up for producing braking and friction materials, will initially focus on after market products like linings and brake pads. Federal Mogul is a global automotive components manufacturer.

Government Initiatives
The Government of India is in the process of forming a National Automotive Board (NAB) which would become a formal set-up to look into the issue of recall of vehicles and hence improve manufacturing standards. The prospective body, to oversee technical and safety aspects of vehicles, will have representatives from all the nodal ministries and automotive bodies such as the Automotive Research Association of India (ARAI).

The Government of Gujarat has always been on a high to promote its industrial space especially it’s the automobile sector. In order to boost the State Government’s efforts in this regard, Gujarat Government’s Industrial Extension Bureau, along with Automotive Components Manufacturers Association, French Vehicles Equipment Industries (FIEV) and French auto-major Peugeot, organised a seminar and business meeting on January 9, 2011 wherein 60 French automobile component makers were briefed on opportunities to set up vendor park near Sanand (Gujarat’s auto hub) in Ahmedabad district.

Similarly, the Government of Gujarat has also announced its plan to disburse 240 acres of land at Sanand to the All India Plastic Manufacturers Association (AIPMA) to set up a plastic park that could attract an investment of about Rs 5000 crore (US$ 981.65 million). The Government’s move marks its eye for detail as the measure has come in the light of the fact that a finished car would require about 150 kgs of plastic.

Road Ahead
Ratings agency Fitch has maintained a stable outlook towards the Indian auto components industry for the year 2012. The industry is expected to perform well owing to OEM’s robust demand for localised spares.

According to a report by ACMA, the Indian auto component industry would garner US$ 113 billion of turnover by 2020-21, growing at a compounded annual growth rate (CAGR) of 11 per cent through 2011-21. Not only domestic demand, India is poised to scale new heights in terms of exports as well as the report estimates exports to be worth US$ 29 billion by 2020-21, growing at a CAGR of 18.8 per cent through the forecast period.

Exchange Rate Used: INR 1 = US$ 0.0196 as on January 17, 2012

To download 40-page report, please click here.

Source: IBEF – GAI

 


Korea will emerge as hub of FTAs


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‘FTA negotiations with China to begin within first half of this year’

This is the first of a series of interviews of top officials on FTAs as the Korea-U.S. FTA takes effect on March 15. ? Ed.

The free trade agreement with the United States, which goes into effect Thursday, is anticipated to help Korea attract foreign investment in addition to boosting exports to the world’s largest market.

“Being a country that depends heavily on trade, our competence means strong exports to the advanced economy, which accounts for 23 percent of the world’s production and has the highest consumer standards,” Trade Minister Bark Tae-ho said in an interview with The Korea Herald.

“If we do well in the U.S. market, we can do well around the world.”

The United States, which had been Korea’s largest trading partner until 2003 when it was overtaken by China, was ranked fourth largest last year after China, Japan and the European Union. Korean products’ U.S. market share also fell from more than 3 percent in 2004 to 2.6 percent last year.

To maximize the effect of the Korea-U.S. FTA, the Seoul government will continue to educate small companies on how to get origin certifications for their export items and how to make use of the preferential duties, Bark said.

The professor-turned-minister said opposition politicians’ demands for a renegotiation or scrapping of the Korea-U.S. FTA were “irresponsible, inappropriate and unacceptable,” saying that problems and disputes over the FTA can be discussed through various joint committees between the two countries.

“Repealing the FTA would hurt bilateral relations and undermine Korea’s international credibility. Most importantly, it would be a major loss to our national interests,” he said.

As Korea is engaging in consultations for an FTA with China, it will soon emerge as the hub of FTAs binding the three largest economies of the world including the EU and therefore one of the most attractive investment destinations in the world, Bark said.

“Foreign investors often complain about the regulatory regime and the labor relations in Korea, but they will be willing to overcome such difficulties once Korea becomes the hub of FTAs,” he said.

“Korea will serve as a gateway for American, European and Chinese investors seeking access to these enormous and dynamic markets.”

The negotiations for the Korea-China FTA are expected to begin in the first half of this year, according to Bark.

The two sides plan to issue a joint statement on the basic framework of the talks, which will consist of two stages, when they announce the beginning of the negotiations.

The first stage will be on settling the sizes of baskets for general, sensitive and ultra-sensitive items. The second stage talks will not proceed unless the two countries reach an agreement in the first stage.

“Through the FTA with China, we should achieve market dominance in the world’s fastest growing economy, where some 30 cities the size of Bundang are springing up each year,” Bark said.

“The Chinese government is shifting the focus of its policy for economic growth from exports to domestic consumption, for which they are providing subsidies.”

Most of Korea’s trade surplus with China comes from processing trade in which Korean companies in China import machinery, parts and raw materials from their parent companies in Korea. A lot of the products assembled in China are sold off to the United States or the EU, and therefore get tariff refunds.

“China doesn’t like this. They are reducing incentives for exporters, and with labor costs in China rising, many Korean companies are returning home,” Bark said.

“By sealing an FTA with China, we would no longer have to produce in China to tap into its market. Foreign companies targeting the Chinese market could come to Korea for production.”

Also, an FTA would help remove non-tariff barriers and make Beijing’s attitude more favorable toward Seoul when dealing with trade problems, according to the minister.

The former professor at Seoul National University’s Graduate School of International Studies took office as trade minister in December.

Source: The Korea Herald – GAI

 


Asia Pacific Economic Outlook — January 2012


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The January 2012 edition of the Asia Pacific Economic Outlook gives a near-term outlook for China, India, The Philippines, Singapore, and South Korea.

China: There is a risk that China’s slowdown could become more pronounced, given waning European demand for exports, problems in the property market, and the potential for defaults by property and public-sector borrowers. On the other hand, looser monetary policy and further measures could boost the economy.

India: India will likely face significant challenges in 2012. After a period of monetary tightening designed to curtail inflation, the economy is slowing faster than anticipated due to economic headwinds from abroad. Moreover, the rupee dropped sharply, hurting external debtors and increasing the country’s import bill.

The Philippines: Tumbling exports and a slowdown in remittances from overseas workers will likely impact economic growth in The Philippines. The country may come to rely more on domestic consumption and investments. Given the downside risks from global economic developments, the Philippine economy is expected to expand at a modest pace of around 3.5 percent this year.

Singapore: Singapore’s economy may be headed for tough times in 2012 as the volatile world economy weighs heavily on GDP growth. Furthermore, growth in wage rates is expected to decelerate, and job creation is likely to decline. While domestic demand and regional trade may provide some respite, it may not be able to adequately compensate for lost demand from the advanced countries.

South Korea: A combination of foreign and domestic forces is making South Korea’s economic and political environment increasingly dynamic. Downside risks loom large due to the regional political landscape and the country’s dependence on its export sector. The extent of any global recovery will play a major role in determining South Korea’s growth prospects in 2012.

To download 14-page report, please click here.

Source: Deloitte Asia – GAI

 


Manpower Employment Outlook Survey India (Q1/2012)


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The Manpower Employment Outlook Survey for the first quarter of 2012 was conducted by interviewing a representative sample of 4,556 employers in India. Employers forecast a dynamic labor market in India during first quarter of 2012. With 43 per cent of employers anticipating an increase in staffing levels, 2 per cent predicting a decrease and 35 per cent expecting no change, the Net Employment Outlook stands at +41 per cent.

Employers in all four regions expect to grow payrolls in first quarter of 2012. A vigorous hiring pace is predicted in the East, the South and the West, with employers reporting Net Employment Outlooks of +44 per cent. In the North, employers report robust hiring intentions, with an Outlook of +40 per cent.

Employers forecast workforce gains in all seven industry sectors during first quarter of 2012. The most optimistic Net Employment Outlook of +49 per cent is reported in the Services sector, and bullish hiring plans are also evident in the Mining & Construction sector, where employers report an Outlook of +47 per cent. Booming labor markets are likely in both the Finance, Insurance & Real Estate sector and the Manufacturing sector, according to employers, who report Outlooks of +44 per cent and +43 per cent, respectively. Brisk hiring activity is expected in the Transportation & Utilities sector, with an Outlook of +34 per cent and the Public Administration & Education sector, where the Outlook stands at +33 per cent.

To download 24-page report, please click here.

Source: Manpower India & IBEF – GAI

 


Mega Trends in India’s light vehicle industry


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India’s automotive ecosystem is fast changing.  This report outlines seven mega trends you should know about to prepare for the decade ahead.

To download 4-page Executive Summary, please click here.

Source: Ernst & Young – GAI

 


Building a High-Skilled Economy: The New Vietnam


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This local insights research paper is based on research that was commissioned as part of our Memorandum of Understanding (MOU) with the local Vietnamese government that explores how Vietnam can address its labor challenges to achieve its future growth potential. The research is based on surveys conducted with our Manpower Vietnam team to identify where skills gaps exist within the country.

Vietnam’s industry is becoming more sophisticated and as a result, the low-cost, low-skill labor that has helped fuel the country’s growth also presents perhaps the country’s most significant, future economic challenge. This paper makes recommendations for how Vietnam can develop its workforce to successfully compete on the world stage.

To download 12-page report, please click here.

Source: Manpower Group – GAI

 


High Performance Manufacturing: India’s Next Opportunity


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In India, the unique character of three key business levers—business technologies and processes, labor and talent, and partner networks – provide manufacturers with the opportunity to distinguish themselves from competition both at home and abroad. Our research indicates that how India’s manufacturers deploy these levers in their business often determines their capacity to achieve high performance.

These are the key business levers that allow India’s manufacturers’ to turn strategy into operational reality and build the distinctive capabilities—smart shop floor, market-driven innovation, data-driven decision-making and responsive relationships-that will allow them to sustain high performance.

To download 44-page report, please click here.

Source: Accenture – GAI

 


Global auto makers stumble in India’s policy fog


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Global auto makers which have rushed to set up factories in India to feed local demand admit they have been tripped up in the last 12 months by the country’s unpredictable policy-making.

After a stellar 2010-2011, when car sales grew 31 percent year-on-year, the industry has faced a staggering slowdown and radically different buying patterns — bad news for giant complex companies that plan years in advance.

“To say we’ve been wrong-footed would be an understatement,” the head of General Motor’s India operations Karl Slym told AFP on the sidelines of the country’s Auto Expo car show last week.

Shinzo Nakanishi, chief executive of Maruti Suzuki, the Japanese-owned market leader in India, admitted that “many changes have surprised us during the last year”.

The first factor was the Indian central bank’s decision to persist doggedly with an aggressive cycle of interest rate hikes to tame inflation. It raised the cost of borrowing on seven occasions in 2011.

Many customers who rely on credit to buy vehicles have either decided to defer their purchases or simply put them off altogether, meaning the mood of the Auto Expo was more sober than during its last edition two years ago.

In October, new car sales fell 24 percent year-on-year, the biggest dive in more than a decade, while sales over the full financial year to March are forecast to be flat compared with 2010-2011.

The second major swing has been the switch in demand from petrol-engined cars to diesel, caused by an unexpected change in policy that emerged from India’s finance ministry.

In June 2010, Finance Minister Pranab Mukherjee announced suddenly that the government had deregulated gasoline prices, leaving state-run energy companies free to increase their prices.

Subsidies and regulation for diesel, used by the country’s hundreds of millions of farmers as well as the truckers who transport most of India’s freight, remained in place.

“Thirteen times prices were raised. Each time the gap between petrol and diesel got wider,” Nakanishi lamented to AFP.

Today, diesel costs around $0.40 per litre less than petrol — a huge gap in a low-income and highly price-sensitive country.

Not surprisingly, four out of five buyers now purchase diesel-powered cars, but the industry with its complex supply chains and manufacturing plants was not ready to cope with such an abrupt change in consumer preferences.

The head of Ford’s operations in India, Michael Boneham, said the US giant was unable to produce the number of diesel units requested by buyers from its factory in Chennai.

“I don’t know where government policy is going to go on this issue,” he admitted to reporters last week, adding that the company had been “constrained”.

“We could have been selling significantly more diesels,” he said.

Most modern engine manufacturing plants are designed to be able to produce both petrol and diesel engines, but switching from one to the other requires significant investment in new machinery and tooling.

The other difficulty is that the vast and vital supplier base producing components for each factory needs time to adapt and catch up with any sudden change in demand.

Slym from General Motors complained that the industry has only partial visibility on major policy decisions that affect it.

“The budget is around the corner (at the end of February) and you can be sure that something will change,” he said. “And you don’t know about it and you can’t plan for it.”

He said there had been a sudden change in duties for companies importing car kits and assembling them into vehicles in India. The new policy increased import taxes by 65 percent.

“There are plenty of forums where we try to work together with the government, but at the same time there are these crazy things that happen that catch us all out,” he said.

Predicting the direction of policy in India is particularly difficult at the moment, with the government buffeted by a series of corruption scandals and assailed by critics.

Business leaders complain that government departments are sitting on proposals for fear of taking decisions that could be seen as corrupt, while Prime Minister Manmohan Singh has failed to push through his reform agenda.

After a year of few major announcements, in December Singh’s administration rolled out a flagship reform of the retail market, allowing foreign supermarkets to open stores for the first time.

The delight of Wal-Mart, Tesco and Carrefour, the main companies set to benefit, was to be short-lived. Two weeks later, after an outcry from shopkeepers and the opposition, the proposal was mothballed.

Source: The Economic Times – GAI