India's automotive plastics use to rise
Half of the specially engineered plastics used in India's automotive industry are currently sourced globally, and the plastics content of cars made in India is expected to rise 30 percent by 2010, said Sunil Malhotra, deputy general manager of Maruti Udyog, a partner in India's largest car maker. Maruti manufactures cars under collaboration with Suzuki of Japan.
"There is a lot of opportunity" in India, he told a group of three dozen plastics professionals at the Auto Plastic Asia: New Materials and Applications conference in Bangkok on September 14th, 2005.
Several factors are behind the high global sourcing rate in India, said Malhotra: The raw material for some specially engineered plastics - such as special grades of polycarbonate and acrylonitrile styrene acrylate - are not available locally. New technology is also not available locally.
For example, the compounding technology for new generation materials is unavailable in India. Consequently, the high-flow, high-impact raw material to manufacture low thickness bumpers can't be found in India, he said.The growing number of free-trade agreements in Asia has also made global sourcing more cost-effective.
Still, India's use of plastics - including specially engineered plastics - in locally produced, light-weight vehicles is expected to rise from 60 kilograms per vehicle in 2005 to 80 kilograms per vehicle by 2010, Malhotra said. That compares to the current 120 kilograms per vehicle in the United States, Japan, and Europe.At the same time, India's vehicle market sales growth is one of the fastest in the world. Sales should grow by around 10 percent to 1.3 million units in 2005, said Paul Blokland, director of Segment Y Automotive Intelligence, an automotive consultancy in Bangalore, India. Of that, 80 percent will be light vehicles.
Segment Y forecasts India's vehicle market to show about a 10 percent compounded annual growth rate for the next five years, reaching 2 million units by 2011. If India's Tata Motors is able to realize its scheme to build dozens of local plants that will assemble a US$ 2,200 car, Segment Y's sales forecast for 2011 will increase to 2.5 million units, said Blokland. The Tata car would have a 600cc engine with a continuously variable transmission.
To be sure, there are potholes in the road to success for foreign plastics companies in India. For one, engineered plastics represent only a small slice of the automotive plastics market in India.
Plastics consumption based on the vehicle segment in India is dominated by passenger cars, which accounted for 35 percent of plastic consumption from 2002-03, according to Malhotra. Motorcycles were next at 28 percent, followed by scooters, also at 28 percent of total consumption.
Most of the plastic used in passenger cars - 46 percent - is made from PP, a widely available material. Maruti-Suzuki (India), by far India's largest passenger car maker with 43 percent market share, consumed 3,207 tons a year of polypropylene in 2004-05.
But India is a net exporter of both PP and polyethylene plastics. Domestic suppliers include Reliance Industries of Mumbai, Indian Petrochemicals in Vadodara, and Haldia Petrochemicals of Haldia. Foreign suppliers include Idemitsu Petrochemical of Tokyo, Basell Polyolefins in Elkton, Maryland, and Mitsui Chemicals in Osaka, Japan.
Another hurdle: India's relatively low production volume means that it wouldn't be economical to produce the parts just for the India market. Yet, testing and approval systems and standards vary from company to company and region to region. Materials made for India might not pass other places. For example, Europe uses ISO and DIN standards, while the United States use SAE. Southeast Asia uses JIS and SAE.
Malhotra predicts that automakers will unite behind a common approval system, but others are skeptical. "Global specifications are a good idea," said Marc Setzen, managing director EM/TPE Europe for PolyOne Th. Bergmann GmbH of Gaggenau, Germany. "But the 'China price' means that the lowest global price would have to be met, [and] we are struggling with meeting global specifications at the lowest price."