INDIA AUTOMOTIVE LOGISTICS MARKET
KEY FINDINGS
- Finished vehicle logistics via rail has been the fastest growing mode in this market. With a cheaper freight rate per car, it has been the go-to option for many OEMs
- The railways’ share of India’s total automobile freight traffic has increased from about 4.5 percent in FY18 to about 15.4 percent in FY21, and this number is expected to rise to 20 percent by FY22 and 30 percent by FY24.
- The registration fee for AFTOs was reduced from ₹5-3 crore in 2020, and the number of routes allowed for AFTO rakes was increased from 19 to 80.
- APL Logistics and Vascor’s joint venture became India’s first third-party logistics provider to offer rail-based services under an AFTO licence in 2014.
- The growth in railways will be attributed to an increase in passenger vehicle movement by Maruti Suzuki, which accounts for nearly half of domestic sales.
- The BCACBM rakes, which entered production in 2012, have been a driving force in the rail movement of finished vehicles because they can carry up to 318 passenger cars in a single rake of 27 wagons.
- Maruti, a leading automobile manufacturer, plans to move 30% of its outbound volumes by rail as early as 2023.
- Although rail movement of finished vehicles is increasing, trailer and truck movement remains the market leader in the segment because it can cater to all dealers, warehouses, and yards.
- The government and logistics companies are thriving the road infrastructure, which is supporting the automotive industry’s efficiency.
- As of 2021, there are around 12,000 car carriers in the country and these players have been struggling to survive of late due to a change in regulations.
- Most automakers were unwilling to pay more for finished vehicle road logistics, but with diesel prices steadily rising over the last two years, truck operators were forced to increase rates.
- Poor road quality, increased road congestion, and competitive freight rates provided by railways, particularly for longer routes, are the main factors lowering finished vehicle movements by truck/trailer.
- Shipping finished vehicles within the country is not financially feasible because trucks will still be used to transport vehicles from the factory to the port and then from the port to the dealers.
- Higher port fees are dissuading more shipping lines from using it for domestic shipments and entering the Indian finished vehicle logistics market.
- The automotive logistics sector is critical to India’s GDP growth. It contributed 13% of the country’s GDP.
- India’s automotive logistics market experienced rapid growth as a result of improved connectivity and distribution networks, uniform regulations, and reduced administrative barriers.
- Increased domestic sales in rural areas will propel the market as the average cost of transporting a single vehicle to these areas rises, increasing the overall market value.
- Passenger cars will be the market drivers as upwards of 3 Million cars are being produced in India. The number is expected to breach 4 Million by 2024
- Among 1PL players currently, only Hyundai, Maruti Suzuki and Toyota are having a significant share in the market.
- The LCV share in the automobile sales has been more or less stagnant for the past 4-5 years with 2.2-2.7% share. LCVs will get back to its pre-COVID sales numbers by 2023-2024.
- The average ticket price for LCVs is higher than passenger vehicles because, while carrying LCVs, the same car carrier will have the average capacity to carry only 5 LCVs instead of 6-8 passenger vehicles
- Currently, Mahindra Logistics handles its own finished light commercial vehicle logistics, while other players rely on third-party logistics providers.
- In FY2021, South Western Railway dispatched its first export-bound New Modified Goods (NMG) rake from Bangalore to Bangladesh, consisting of 25 wagons loaded with 100 Ashok Leyland’s Dost LCV.
- The average ticket price for finished vehicle movement by 1PL players is slightly lower than that of 3PL players. This is because the margin for vehicle transportation is so small among 1PL players.
- Maruti Suzuki is expected to transport more vehicles via rail after the completion of the Dedicated Freight Corridor (DFC), increasing the market share of 1PL players in this market.
- Processes such as JIT(Just in Time) and JIS(Just in Sequence) are increasing the efficiency and are helping in improving the market share of 3PL players in the finished vehicle market
- At the moment, only four vehicle manufacturers use their own logistics, while other top manufacturers such as Renault, Nissan, and Honda rely entirely on 3PL players for finished vehicle movement.
- Indian Automotive Finished Vehicle Logistics Market is one of the fragmented markets with more than 30 players in the segment spread across India. Most of these players have based themselves near the manufacturing plants of Gurugram, Chennai & Bangalore
- Around 35 million cars are on Indian roads by FY 2022. Over 25 million are out of warranty, and the majority of their owners see little or no reason to visit OEM authorised service centres for their needs.
- The service retention ratio for most OEMs in India remains at 40%, with the remaining 60% still relying on unorganised service centres.
- As of 2021, there are 300,000 unorganised service and spare parts workshops operating across the country in metro cities, tier 2/3 cities, highways, and villages.
- Disparities in the standards of new and replacement parts can cause serious problems with the vehicle’s safety and performance. Furthermore, the dual certification requirements increase the cost of compliance for smaller manufacturers.
- OEMs’ “click to buy” option is simply a last mile delivery option (dealer to customer) with little impact on finished vehicle logistics.
- Carwale, a last-mile delivery service, has partnered with Citroen, a French automaker. This collaboration enabled ‘last – mile vehicle delivery’ in India, providing customers with doorstep delivery.
- In September 2021, The Coach Rehabilitation Workshop (CRWS) Bhopal of the Indian Railways used 110kmph NMG coaches. The coaches facilitated faster delivery of automobiles from factories to consumer centres.
- In March 2022, Indospace launched over 2 million square feet of industrial warehousing and logistics parks in Gujarat to meet industrial, logistical, storage, and manufacturing demand.
INTRODUCTION
The automotive supply chain and logistics business has seen tremendous transformation in recent years and may become unrecognizable in the next few years as a result of trends.
These developments include the expected widespread adoption of electric vehicles (EVs), with all of the ramifications for engine manufacturing and spare parts logistics, to mention just two.
Logistics is the collection of operations related with the acquisition, transportation, storage, and delivery of supply chain goods (i.e., products in all stages of manufacture, service, and information).
Logistics includes transportation, distribution, warehousing, material handling, and stock control, and it works closely with production.
The supply chain grows more intricate for items such as autos, which involve various products, technology, and processes.
The Indian Car Logistics industry is characterised by the complexity of the supply chain, which extends from automotive dealers back via numerous layers or tiers of suppliers.
The automobile company’s supplier network encompasses hundreds of companies that supply everything from basic materials like steel and plastics to complicated systems like gearboxes, brakes, and engines.
Automobile logistics refers to the movement of raw materials, components, vehicles, and spare parts through the stages of automotive acquisition, manufacture, and sales.
Automotive logistics encompasses supply chain for raw materials and components, garage logistics for the manufacturing process, sales logistics for vehicles and spare parts, as well as object purchasing, transportation, storage, offloading, distribution processing shipment, and processing information.
INDIA AUTOMOTIVE LOGISTICS MARKET DYNAMICS
The Indian car sector is a key contributor to the Indian economy, having surpassed Germany to become the world’s fourth largest auto market, with sales growing year on year.
Two-wheelers dominate the business and account for a sizable portion of domestic automotive sales. In India, the automotive logistics business has grown quicker than other sectors.
As globalization, technological improvements, and rising degrees of outsourcing continue to drive the global logistics services industry, previously operational and segregated operations such as transportation and warehousing have transformed into integrated transport control.
Automotive logistics is a significant component of automotive businesses, as well as a logistic activity with a high level of complexity in the logistics sector.
When compared to other logistical operations, Automotive Logistics is capital-intensive, technology-intensive, and expertise. The Indian automotive logistics industry environment today is characterized by rising complexity and a variety of challenges.
The speed of change of these parameters breath-taking and is driving increasing complexity in the logistics ecosystem.
Former competitiveness considerations such as “cheap labour, favourable exchange rates, and concessional duty structures” are no longer applicable, and so adopting supply chain techniques is essential to address the difficulties of a dynamic system.
Pune is known as the “Detroit of India,” and Chakan is one of India’s most important hubs for global automakers. At Chakan, the automobile industry accounts for more than 60% of APM Terminals’ clients.
In the Indian automobile sector, business environmental variables and government regulations have the greatest impact on supply chain competitiveness, followed by cost advantage and buyer-supplier relationships.
Because labour and raw component requirements are essentially the same across the car component manufacturing industry, these characteristics do not contribute to any competitive advantage.
INDIA AUTOMOTIVE LOGISTICS MARKET SEGMENTATION
The Indian Market of Automotive Logistics can be segmented into following categories for further analysis.
By Usage Organization Type
- Medium Scale Enterprise
- Small Scale Enterprise
- Micro Scale Enterprise
- Startups
- Large / Multinational Organizations
- Professional Collaborated Enterprise / Group
By End Use Application
- Lubricants and Chemical Technology
- Manufacturing
- Technology and Engineering Services
By Activity Type
- Warehousing
- Transportation
- Inbound
- Outbound
- Reverse Logistics
- Aftermarket Logistics
By Transportation Type
- Maritime
- Roadways
- Airways
- Railways
By Regional Classification
- Western Region – India
- Eastern Region – India
- Southern Region – India
- Northern Region – India
RECENT TRENDS IN INDIA AUTOMOTIVE LOGISTICS MARKET
Logistics 4.0 technologies have emerged as increasingly important tools in the automotive logistics sector in recent years, with an expanding quantity of OEMs, tier suppliers, and logistics providers investigating the potential advantages of their deployment: improved operational efficiency, correctness, and recognition, efficient asset management, and two – advance workforce capabilities.
Seat has been able to speed up and integrate all of its operations and elements with the use of the Internet of Things (IoT) – the networked connection of physical items to enable real-time data visualization – and the automation of logistical flows.
Recently, automated guided vehicles (AGVs) were introduced to automate in-house logistics flows, artificial vision was used to verify quality and security, and joint robot technology was applied for logistics picking.
In terms of outbound procedures, RFID has assisted the OEM in automating its loading validation processes, enhancing compound productivity and efficiency.
Once reaching the consumption point, the employment of artificial vision systems allows for quality and security validations, as well as the automation of the entire line feeding process.
Drone technology is emerging as a new way to exploit our airspace to automate internal procedures and deliveries.
Augmented reality (AR) is bridging the physical and digital worlds by assisting in the selection of parts and technology for bionic augmentation such as exoskeletons and sophisticated wearable devices.
These have the ability to broaden the conventional physical boundaries, hence facilitating material handling. RFID technology can also be used to automate inventory and interior tracking activities.
A passive tag is affixed to the container or part being tracked, and it is detected by specialised antennae when it passes through the gateways.
Other key technologies supporting the Indian Automotive Logistics Market’s Logistics 4.0 systems include industrial WLAN, RFID, RTLS (indoor GPS) and DMC (Data Matrix Code) for accurate control as well as free route planning (ANS+), PLS (Proximity Laser Scanner) mechanisation controllers, AI modules, camera reader devices, controls applications, and framework bundles.
The changes are numerous, ranging from Mahindra & Mahindra’s expansion to Ford and General Motors’ continued investment. Even Premier Automobiles, which dominated India’s automotive business before to market liberalization, is making a comeback with a tiny SUV.
Maruti Suzuki, which is closer to the logistics industry, is about to establish a new yard in Nagpur, central India, with a capacity of 90,000 vehicles. According to reports, four shortlisted service providers are bidding for the contract.
Maruti Suzuki already has a logistics centre in Bangalore from which it serves the southern region. It’s widely assumed that Hyundai Motors is considering an internal plan to build a yard in Assam to serve the country’s north-east.
On the inbound side, some analysts predict India will favour operators who own and manage a larger portion of their transportation assets. Indian logistics, according to the CKD shipping of automotive and aeronautical vehicles, would gain from asset consolidation in this way.
For 95 percent of outbound logistics in India, trucks are still the primary mode of transport. The Railway Board for state railways, on the other hand, believes rail will acquire traction shortly. Railways should never be underestimated; their capabilities are far greater.
Rail for automobiles was created utilizing specialized wagons rather than containers, but the current dearth of suitable wagon designs favors container use. Other sectors of the supply chain, such as inbound to manufacturing, may have promise as well, although the short-term outlook is grim at the moment.
Alternatives would almost certainly be sought by the industry. Packaging would be a driving force in changing the logistics of parts from suppliers to OEMs.
INDIA AUTOMOTIVE LOGISTICS MARKET RECENT ACQUISITION
A joint venture between NYK and ANJI Automotive Logistics known as NYKANJI Car Transportation has been purchased by Yusen Logistics, which now owns 20% of Shanghai NYK-ANJI Logistics. For the Shanghai Automotive Industry Corporation, to which ANJI belongs, as well as a number of other automakers, NYKANJI has managed ground transportation for finished automobiles in China for the past ten years.
Shareholding in the new firm is now split between ANJI (51%), NYK (29%), and Yusen Logistics (20 percent). The new partnership aims to grow their company in logistics for finished cars and auto parts.
The largest fleet of car carriers in the world is run by NYK, ANJI has a significant presence in the warehouse and transportation sector for the Chinese automobile industry, and Yusen Logistics is a global ocean/air freight forwarding and contract logistics network.
The three businesses intend to provide an integrated automobile logistics solution that includes the shipping of finished vehicles, aftermarket components, and parts from other countries.
In order to establish a joint venture that specialises in the transportation of finished autos using automobile freight trains, NYK Auto Logistics India (NALI) and Adani Logistics (ALL) inked a contract.
To reach the non-automotive segments, Tata Group company Drive India Enterprise Solutions Limited (DIESL), owned by TVS Logistics Services Limited (TVS LSL), has acquired a 100% interest. With an investment of up to Rs 250 crore, Tata Opportunities Fund (TOF) would acquire a small share in TVS LSL.
This money will be used to pay for the purchase as well as other operations. This acquisition gives TVS LSL a fresh opportunity to serve underserved or just underserved non-auto markets. The acquisition is contingent on receiving the necessary regulatory approvals, notably the nod from India’s Competition Commission (CCI).
Both TVS LSL and DIESL have complementary strengths and opportunities across industries and regions, and this acquisition enables TVS LSL to expand its clientele within DIESL’s consumer durables target markets, which include FMCG, retail, technology, and telecommunications, as well as expand its business into non-auto sectors.
We have expanded our service to include last-mile delivery, demand forecasting, and technological logistics as a result of our international acquisitions. Investment in logistics has become necessary as e-retail infects the market, and this acquisition could capture this prospective market because DIESL has a strong base in this industry.
The fund thinks that the new government’s focus on infrastructure investment and tax reform, particularly with regard to the goods and services tax, will be an encouraging lean-forward strategy and that this will encourage third-party logistics (3PL) companies to provide top-notch solutions that signal win-win manoeuvring.
INDIA AUTOMOTIVE LOGISTICS MARKET COMPETITIVE LANDSCAPE
The automobile sector is the greatest single manufacturing activity on the planet. Most automotive firms’ supply chains are mostly related to predictions, which is a standard practise in the automotive supply chain.
From the first chain, raw material suppliers, to the last chain, automobile consumers, vehicle manufacturers must match supplies with needs.
Adani Logistics Limited (ALL) is the country’s most diversified end-to-end freight forwarder, with a presence in all big markets and expertise in handling a diverse range of customers in Retail, Industrial, Container, Bulk, Break-Bulk, Liquids, Auto, and Grain Handling.
ALL has built and manages inland container facilities at Patli and Kila Raipur, as well as multi-modal logistics parks (MMLP) in Kishangarh, Malur, and Kanech.
It operates one BCA-CBM rake (in collaboration with NYK Logistics) for automotive rail transportation. It specialises in the rail transportation of completed automobiles in containers, employing unique technology created specifically for a big vehicle customer.
Within the Indian automotive logistics business, Mahindra Logistics has been one of the main market holders in the Third Part based Automotive Logistics supply.
TML has recently implemented the Warehouse Management System and Transport Management Systems, which optimize logistics processes throughout all warehouses.
WMS and TMS aid in the transformation of traditional warehouses by increasing the efficiency and productivity of warehouse operations. WMS automates warehouses receiving, putting away, picking, kitting, and shipping, as well as inventory cycle count planning and execution.
Telematics has been incorporated to provide Control Tower with end-to-end visibility to support the SCM and EM lines of business. The Control Tower Operations (CTO) system is our primary means of communicating the timely delivery of all movements, products, and people.
This aids in keeping a close check on the fleet of cars. TML has also introduced the ALYTE Management System, which focuses on end-to-end visibility for EM operations.
The Alyte’s major aim is to push trips to drivers and eliminate the inconvenience of handwritten trip sheets by digitally capturing these trip facts.
It provides centralised operational control and monitoring, as well as an end-to-end people transportation management system with routing and scheduling.
TVS Logistics is a key contributor to the Indian automotive logistics business, with the most recent technical achievement being the product development integration of the TVS SCS Vision System, which is based on the human eye.
We have tried to translate this functioning to a digital process utilising technology, much as the human eye associations and learns over time by taking in data and analysing it frequently.
Vision technology is employed in human capital management, logistics management management, label reading automation, and removing manual validation solutions through the use of cognitive intelligence and sophisticated neural network models.
To establish a highly creative supply chain model, advanced ideas such as facial recognition, label reading, Personal Protective Equipment (PPE) recognition, and drone technology are included.
INDIA AUTOMOTIVE LOGISTICS MARKET COMPANIES PROFILED
- KWE India
- Adani Logistics Company
- Future Supply Chain Solutions
- VRL Logistics India
- TCI Express
- Pallia Trans Logistics Pvt Ltd
- Tiger Logistics India Limited
- IVC Logistics Limited
- TVS Logistics India Limited
- BLG Parekh Logistics
THIS INDIA AUTOMOTIVE LOGISTICS MARKET REPORT WILL ANSWER FOLLOWING QUESTIONS
- India Automotive Logistics Market size and Forecast, by region, by application
- Average B-2-B price for India Automotive Logistics Market, by region, per user
- Technology trends and related opportunity for new India Automotive Logistics Market tech suppliers
- India Automotive Logistics Market share of leading vendors, by region,
- Coronavirus impact on India Automotive Logistics Market earnings
