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EXECUTIVE SUMMARY0. 1 PROF ILE OF PASSENGER CAR INDUSTRY0 .1 .1 The passe nger car industry in India started in 1928 wh en GeneralMotors set up an assembly plant at Bombay in 1928. The next stagewa s starti ng of thre e Indian com pan ies for assem bly of ca rs from CKDpa cks in forties. However, the ind us try c an really be cons idered to havestar ted in 1953, wh en G overnm ent decided to allow only projec ts withphased manufacturing programmes. The assembly of cars with im-ported CKD pac ks in 1948 wa s aroun d 300 0 cars per year. Graduallythe production increased as also the indigenous content and current

prod uction is 1 7660 0 no s. (in 1990). At pre sen t in m ost ca ses t heindigenous content is over 90% . The production in last 11 yea rs ha sbeen as under:-T A B L E I

P A S S E N G E R C AR P R O D U C T IO N F R O M 1 9 8 0 T O 1 9 9 0Year19801981198219831984198519861987198819891990

Production3053842106426744509064013102456116006148495159941177190176600

No. of Units44455555544

0 .1 .2 The initial m anu factu rers after ind epende nce were HM, Premier andSta nd ard Motor Pro duc t of India Ltd. (SMPI). While HM an d Prem ierare still two major un its, SMPI h a s been closed for last mo re th an two1

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years . For the initial alm ost 30 ye ars car produ ction rem aine d w ith theinitial three un its. In 197 6 Sipani entered th e field. Sipani are a sm allun it with maxim um production of a li tt le over 900 . They have not m adeany mark in the industry. Sipani has not produced any car in 1989.In 198 3 Maruti entered the indu stry in a big way and in a few years h a sbecome the leading car manufacturer with around 60% of the totalproduc tion. The production of various m an ufa cture rs in last few y earsis as under:-

1987198819891990

H M255612755729326

-

Premier311913656742033

-

SMPI484217

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Sipani350210

--

Maruti9090995390105826

-

Total148495159941177190176609

0.1 .3 For m any years th e off take wa s veiy l imited a nd m an ufa ctu rerspersisted with the same design for many years with minor changes.The new models brough t out were also based on models obsolete withthe collaborators for which 2nd hand dies for the body could beobtained at reasonable cost .0.1 .4 All m an ufa ctu rer s sta rted p rodu ction with foreign collabora tion. Evenwhen they were bringing out new mo dels, thes e were produced on theba sis of imported designs and know-how. The older m an ufa ctu rers didmake minor modifications and improvements in their cars on theirown. But when they wanted a completely new model, they obtainedfresh technical know-how.0.1 .5 The pass eng er c ars produced were curren t 'State of Art ' desig ns w ithmodern features when first produced. However, the level of R&D in

passenger car industry is still limited and mainly looks after importsubsti tut ion and minor modifications. Without a considerable in-crease in R&D, it thus appears that the industry will keep fallingbehind and when new models needs to be introduced, they may haveto depend on foreign technology.

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0 .1 .6 Exports in the past have been very limited, the value of exports in198 7-88 being Rs. 8.9 c rores. Recently M aruti is tak ing spec ial actionto make changes to suit specific market of different European coun-tries and is exporting to Hungary, Bulgaria, Malta, France and Italy.0 . 2 T E C H N O L O G Y S T A T U S - IN D I V I D U A L U N I T S0.2 .1 Hindu stan Motors Ltd.

HM was the first unit to m anu factu re pass eng er ca rs. Starting withHin dustan 10, it la ter produced H indu stan 14, Lan dm aster andAmbassador. Ambassador was produced in different models Mark I ,M ark II, M ark III, M ark IV an d Nova. Th e initial collabo ration w as withNuffield of UK and A m bass ado r h as strong rese m blanc e to M orrisColey which went out of production in UK in mid fifties.Recently HM has brought out a new model Contessa Classic withIsuzu engine and power train and Vauxhaul body. This car qualifiesfor the fuel efficient norms specified by the Government of India.The Com pany, in addition to mak ing imp rove m ents from time Lo timein their models, have carried out the following major projects on theirown:

Engineering of Contessa with original Ambassador engine.Engineering of Contessa with imported Isuzu engine.Improvements in Ambassador 1500 cc engine.The Company has the following current collaborations:-

Ricardo of UK for improving fuel efficiency of 1500 cc engine.Isuzu of Ja pa n for 1800 cc engine and power (rain assem bliesused in Contessa.Isuzu of J a p a n for a 4 cylinder diesel engine prop osed to be fittedin cars.Mckenzie of USA for organisation and productivity improve-men t s .

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0.2 .2 Premier Autom obi les Ltd.Premier Automobiles Ltd. (PAL) was set up in late 4O's initially forassembly of cars . The manufacture of cars was later taken up withtechnical collaboration of FIAT of Italy.Th e com pan y originally pro du ced M illecento an d th en F iat 11 00 . Afterthe collaboration was over, they named the car as Padmini. Thechanges in the design were marginal and company met cri t icism onthis acc oun t by pu tt ing forth th at low volume a nd lack of reso urc es didno t permit an y large scale R&D.W ith th e adve nt of M aruti Udyog with a m od ern fuel efficient c ar an dlarge prod uction volum e, PAL took urg ent s teps to me et the challengeand retain reasonable share of the market . They made the followinginrprovements:-

Improved fuel efficiencyReduced exhaust pol lut ionDevelopment of air conditioned modelDieselised version of car

The company also introduced a new model NE 118 with a new Fiatbody an d N issan engine. The technology wa s imported for this car . Thedesign has stabil ised and is proving popular .Com pany h as comm issioned AVL of Au str ia to mak e improv emen t inllOOcc engine to bring it to world class level. This is expected to beimplemented in 1991.While the re was negligible R&D by the c om pan y for the initial 30 yea rs,currently the R&D and m anu facturin g capacity ha s m atu red to a levelwhere they can absorb impo r ted technology and m ake improvem ents .They are still very far from having ability to design and develop acompletely new model.

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0. 2. 3 Maruti Udyog Ltd.Maruti was incorporated in 1981 as a Government company. Theystar ted prod uction in Decem ber 19 83 with collaboration from Su zuk iof Ja p an . Ini tial ly Suzuki had 26% equity which h a s since increasedto 40% .The original model was replaced in the 2nd year itself with a newstre am line d m odel with mo re leg room an d b ett er fuel efficiency. A van(now called O mni) in two types of roof and a J e e p type vehicle Gypsy,were also introduced in quick succession.The various cars proved extremely popular and production hasalready crossed 100 ,000 nos . which is 60 % of th e total pro duc tion ofpasse nger car . The company ha s an up to da te man ufac turing facil ityand absorbed the technology successfully. The foreign equity andpresen ce of a nu m be r of Ja pa ne se exp erts h a s helped in the s tabi l isa-tion of production.In the initial stages Maruti set up a limited R&D department forabsorbing the technology th at was being imported. Even a t this stageMaruti made certain modifications in the imported technology onmarket considerat ions e .g.

Application e ngineering to develop special bod ies for schoo l van ,taxi, delivery van, executive van, ambulance.Improved suspension and seating for OMNI, which was usedmore as a car than a commercial vehicle.Modifications in Gypsy and Maruti 800 to meet export require-m en ts of various coun tries.Various other minor improvements.

In next 5 years, Maruti plans to invest in basic test facilities for theirR&D. These facilities are for evaluating the vehicle performance andmass emission etc . as basic requirements for audit checking ofvehicles for export to Europe.

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0. 3 TECHNOLOGY STATUS IN COMPONENT INDUSTRY0.3 .1 There are a large num ber of old established companies mostly set upwith foreign collaboration initially, who are supplying componentssuch as electricals, pistons, rings, brakes, wheels, carburettors andshock absorbers. These have developed and manufactured compo-nents for Maruti, Contessa and NE 118 mostly on their own but insome cases with assistance from their previous co llaborators. In a fewcases they needed fresh foreign technical know-how e.g. carburetto rsfor Maruti 800. These companies have benefitted from contact withJapanese vehicle specifications in maintaining quality standards.Many of these companies are already exporting their product.0.3 .2 In some cases units have been set up specifically for supplying to

Maruti. Here joint venture companies have been set u p with Marutiand technical know-how is mostly on the b asis of Maruti's collabora-tion with Suzuki, or fresh collaboration with Suzuki's supplie rs. Someexamples are:-Ja i Bharat Maruti for sheet metal componentMachino Plastic for plastic itemsBharat Seats for sea tsSona Steering for steering gears

Sona steering have a collaboration with Koyo of Japan, and Bharatseats with Howa Kagis of Japan.0.3.3 Though initially there had been some problems with indigenising ofimported items becau se of time taken by component man ufactu rers todevelop components of acceptable quality, the component manufac-tu rers have by now developed m ost of the items. One problem faced bycomponent manufacturers was that in many cases materials to therequired specification were not available and had to be imported.0.3.4 Most component m anufac turers state that they are conversant withthe latest developments in the world for their products and would bein a position to develop these when required by vehicle m anu fac ture rs.

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0 . 4 T E C H N O L O G Y S T A T U S V E H I C L E S0.4.1 With the introduction of the three new passenger vehicles al l withJa pa ne se engines , the prese nt new Indian passen ger cars had becom ecomparable with those available in the world. However, none of themanufacturers have developed capabil i ty for introduction of new

indigenous vehicles and engines. HM and Premiers have howeverdeveloped and intro duced improved version s of A m bas sado r andPadmini cars .0 .4 .2 W ith the low level of R&D set up w ith vario us m an ufa ctu rers , the re isevery reason to fear that with passage of t ime the Indian industrywould not be able to keep up wi th wor ld s tan da rds and un less somespecial action is take n, will again fall behin d. M aruti h a s alread y tak enu p m assive R&D exp ansion an d HM an d PAL m ay also take action to

stren gth en th e R&D set up s considerably so that they are able to keepup their technology to a reasonable level when compared to worldlevels.0 . 5 R E S E A R C H & D E V E L O P M E N T0.5 .1 All the car ma nu fact ure rs hav e their own R & D (excepting Sipani) . Theexp end iture is however quite low and is well below 1% of the turn ov eras agains t 3-5% of ma ny m anu facturers in the wor ld. The ma nufac-tu rers shou ld try to increase R&D exp end iture to 1% of turno ver

imm ediately and 2% in next few years so tha t sufficient reso urc es areavailable for development.0 .5 .2 ARAI, Pune has impressive facilities for research and they have theexper t ise and exper ience to ass is t car and com ponen t m anu factu rersfor improvements in engines and different components design andperformance. VRDE have also good testing facilities which can beavailable to the automobile industry.0 .5 .3 Various IITs, IISc Bangalore and engineering inst i tut ions can alsoassist automotive industry in tackling specif ic problems.

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0 . 6 M AJ O R T E CH NO L O G Y G AP S0.6 .1 Engine Assemb ly

Pollution levelsNoise levelsEngine weight and sizeElectronic programmed ignitionDirect injection petrol engine

0.6 .2 Transm iss ion, Steering , Susp ension and BrakesAutomat ic t ransmiss ionsElectronic power steeringAdjustable steering columnsAir suspension-auto levellingSpecial retarders

0.6 .3 Body, Se ats, Heating and CoolingLow drag coefficient bodiesElectronic controlled hea ting & cooling s ys tem sBetter sealed doors and windows for noise eliminationCorrosion resistant body & chassisSafety seats

0.6.4 MaterialStronger & lighter steel and alu m inium alloysFRP componentsPlast ic componentsCeramic components

0.6 .5 Electrica l & Light ing Sy stem sVariable speed generatorsSteerable front lightsPlastic lenses (light wt.)HID lightsLong storage life batteries

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0.6.6 Accessories

Heat shutting safety glassAnti lock brakesWheel rims onwhich car can run till nex t service stat ion in caseof tyre puncture.

0 .6 .7 Some of thedevelopments are still at experimental stage andhave yetto be fully implemented. Others are cosmetic chan ges . It is necessaryfor Indian manufacturers to examine techno-economic viabili ty ofeach item for Indian conditions before implementation.0 . 7 R E C O M M E N D A T I O N S0.7 .1 Inview of the introduction of a n u m b e r of latest generation of cars in1980's and thebuild up ofR&D capability in theindustry , the indus t rymay consider R&D collaborations for fuel efficient nonpolluting en-gines beside collaborations of the type entered into by H i n d u s t a nMotors and Premier A utomobile for upgrading their older models, assuch collaborations are more economic both in initial costs and ininitial import of components .0 .7 .2 Physical incentives may be considered by the Government to encour-age indigenous designs, developments and marketing e.g.:-

(i) W eighted de du ctio n for approved R&D expenditure.(ii) Grant of sof t loan/subsidy for R&Dinto approved projects ofnat ional importance e.g. fuel efficiency, pollution control, devel-opmen t of new technology etc.(iii) Excise and Sales Tax relief on produc ts based on indigenousR&D.(iv) Prom ote indig eno us develop me nt.

0 .7 .3 Indian manufacturers should earmark larger resources for R&D.Aninitial target may be t aken as 1.0% of the sales turnover, graduallyincreasing to around 2% of the sales turnover.

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0.7 .4 Vehicle m anu fac ture rs should take action to optimise performance oftheir vehicles in the following areas:-(i) An alysing feedback from service ou tle ts to improv e reliability,reduce maintenan ce and increase period between m aintena nce.(ii) Co ntinu ous development to redu ce fuel con sum ption .(iii) Co ns tan t end eav ou rs to red uce weight w itho ut affecting p er-formance or reliability.(iv) Minimising ex ha us t an d noise pollution.(v) Increa sed comfort and safety for pa sse ng ers wi tho ut any addi-t ional cost .(vi) Improved pow er an d pick u p.Car and component manufacturing companies can usefully employthe services of specialist consulting firms in the field of research,product development, manufacturing and planning, available withinthe country, and if neces sary, abro ad, ra the r tha n ente r into collabo-ration s with manu facturin g firms abroad. This app roac h will minim iseforeign exch ange for initial fees as also for impo rt of co m po nen ts. 11willalso assist in building in house R&D capability.

0.7 .5 Vehicle m anu factu rers m us t improve custo m er edu cation for opera-t ion and maintenance by:Well wri t ten operat ing and maintenance manuals .Network of approved service points.Availability of spares at reasonable cost.

0 .7 .6 Vehicle ma nufactu rers may s tudy special requirem ents of urb an andtourist taxis and make available modified vehicles for such use.0.7 .7 Governm ent may consider sponso ring R&D in are as of comm oninterest with national institutions such ARAI, VRDE, CMERI ortechnica l edu cation al insti tution s. Some are as for considera tion are:-

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i . MaterialsStudy into development and use of better materials such as,stronger and lighter steel alloys, corrosion resistant alloys,aluminium alloys, ceramic components, powder metallurgycompo nents , p las t ics e tc .

ii. Component LifeFatigue life studi es of com pon ents and sugge stions for imp rovingfatigue life of components.

i i i . Exhau st PollutionIdentify m odifications n ece ssa ry in existing vehicles to confirm tospecified pollution standards. These standards have to be peri-odically made suffer in line with practices in foreign countries.This should also cover cars powered by alternate nonpollutingsources such as bat ter ies and CNG.

iv. Fuel Quality Imp rovem entStu die s for improving quality of petro1 an d diesel to improve per-formance and reduce pollution.

v. Lubricating Oil Quality Imp rovem entStudies into improved performance of lubricating oils so as toincrease period between oil change.

vi . Road Improvem entStudies into improving quality of roads, alignment, surfacecondition, crossings, traffic control etc.

vii . NoiseEngines and m odifications required to meet specified sta nd ar ds .These levels have to be periodically made stiffer in line withforeign practices.

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0. 7 .8 The re is need for a join t effort of vehicle m an uf ac tu rer s with specialisedinstitutions, with a view to utilise the considerable facilities providedat such insti tutions and expertise developed by them.0.7 .9 In view of large availability of na tu ral gas, Go vernm ent may consid erpossibility of incentive s for use of CNG in Pa sse ng er ca rs on th e linesof New Zealand G ovt. Such u se would reduce petrol cons um ption andalso save foreign exchange.0.7 .10 To me et the long term expected objectives in the area of Pas sen ger Car,a National Car project can be taken up through a consortiumap pro ach involving agencies su ch as VRDE, ARAI, MUL, PAL, HM a ndNational Laboratories. Expert consultancy group from abroad couldalso be involved.

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