Japanese Auto Parts Suppliers in India: EV-related Investment also Increasing

Local JVs and alliances, strengthening production and business systems in the midst of COVID

2021/10/25

Summary

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Automaker assembly plants in India (Click to open the base map)

  India's automotive market was hit by lockdowns in 2020 and 2021 due to the COVID-19 pandemic, causing automakers and parts suppliers to halt production and automobile sales. Also, in India, the shortage of semiconductors has been a drag on automobile production.
  Production volume in 2020 was 3.39 million units (down 24.9% year-over-year (y/y)), and new vehicle sales were down sharply to 2.94 million units (down 23.0% y/y). In 2021, production and sales clearly dropped in May due to the COVID-19 pandemic, but overall the industry recovered significantly in the January-September period, with a production volume of 3.29 million units (up 52.3% y/y) and a sales volume of 2.80 million units (up 51.7% y/y).

  The Indian government has raised the emission standards for passenger cars to BS-VI from April 2020, and has also strengthened safety regulations. In June 2021, the government announced the extension of the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME-II) scheme subsidy (aimed at accelerating the adoption and production of EVs and hybrids), which began in April 2019, until March 2024, and the submission of a proposal to waive the cost of issuing registration certificates for EVs. In August of the same year, the government announced the formulation of the National Hydrogen Energy Mission, which promotes the use of hydrogen as a vehicle fuel, and recommended that all public officials use EVs for official purposes, etc., aiming to reduce CO2 emissions, ensure energy security, and improve energy efficiency.

  Automakers' plans to introduce EVs are also becoming more active. Indian OEMs Tata Motors Limited (Tata) and Mahindra & Mahindra Limited (Mahindra) are developing EV models. Among Japanese companies, Suzuki Motor Corporation plans to launch a strong hybrid vehicle and a low-cost EV by 2025. The price is targeted to be at the JPY 1 million level after deducting government purchase subsidies. Toyota (Toyota Kirloskar Motor Pvt. Ltd.) announced in September 2020 that it would invest over INR 20 billion (about JPY 28.5 billion) in vehicle electrification, electric components and technology for domestic customers and exports. Hyundai Motor Company will launch its first electric SUV in India. Among Chinese automakers, SAIC Motor's subsidiary MG Motor India Pvt. Ltd. launched the new SUV ZS EV, which began local production in January 2020. BYD announced that it will soon launch an electric MPV for B2B (business-to-business) segments in August 2021.
  In terms of strengthening the production system, the third plant of Suzuki Motor Gujarat Pvt. Ltd. started production in April 2021. Suzuki’s total production capacity in India will increase to 2.25 million units, including Maruti Suzuki. Nissan Motor Co., Ltd.'s new SUV, Magnite, is performing well in the market. At the Renault Nissan Automotive India (RNAIPL) Pvt. Ltd. joint venture plant with Renault of France, a system to increase production was built in early 2021. On the other hand, Honda Motor Co., Ltd. has announced its plan to close one of its two four-wheeled vehicle plants and reduce its production capacity by about 40%.

  Some Japanese parts and materials manufacturers have postponed their investment plans due to the COVID-19 pandemic, but they are trying to strengthen their production systems at the request of their business partners and in anticipation of the medium-term expansion of the Indian market. New Japanese supplier expansion into the Indian market include Daicel's airbag inflator plant, THK's linear motion parts plant, and the joint venture plant of Suzuki, Toshiba, and Denso for lithium-ion batteries. Examples of capacity expansion include Mitsubishi Chemical's new production facility for thermoplastic elastomers, Mitsubishi Electric's new motor control unit plant for electric power steering systems, and Yachiyo Industry's addition of a fuel tank production line.
Actively strengthening ties with Indian companies, Aichi Steel plans to invest in an Indian manufacturer to supply special steel made by the company to Thailand and the Philippines. In addition, alliances have appeared such as the installation of HVAC panels by Stanley Electric and chargers for electric buses by Panasonic. Joint ventures include Mitsui's EV drive motor joint venture plant established with a Taiwanese company, as well as Alps Alpine's in-vehicle equipment and Yokowo's in-vehicle antenna business with Indian companies.
  In the area of Japanese suppliers strengthening their development footprint, Aisin Seiki signed a contract with the Indian Institute of Science (IISc) for joint research in the field of AI, JTEKT expanded its technical center in India, Horiba expanded its technical center for testing engine systems, and Mitsubishi Materials opened a technical center in India.

  This report summarizes the trends of Japanese auto parts manufacturers in India (the data covers the period of about two years prior to the beginning of September 2021).

 

Related reports:
Indian two-wheeler production and plant capacity analysis (Jul. 2021)
The global market for motorcycles: India, China and ASEAN countries (Jul. 2021)
Indian Auto Component Industry Analysis (Jun. 2021)
India: Automotive sales impacted by Covid-19 (Mar. 2021)
CASE Development in India (Part 2): Mobility (Feb. 2021)
CASE Development in India (Part 1): Electrification (Feb. 2021)

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