What does the automotive industry include?

Typically one is tempted to consider the manufacturer as the sole member of Automotive Industry. However the value chain of automotive Industry is very long irrespective of the business unit or segment ( Passenger Vehicles, Commercial Vehicle including both buses & Trucks, 2W/3W Vehicles) . A bird eye view of the auto ecosystem will introduce us to several participants who play vital role in this industry.

UPSTREAM

  1. Raw materials – It may include the Body In White (sheetmetal) that goes to press shop for stamping or raw material for sand casting the engine block. These are ingredients that goes through further processing (drilling,milling, turning, stamping, maching etc) before being ready as a semifished good.
  2. Technology – It will include the information technology used for Telematics, Engine Control Unit, ABS unit etc and also the product testing and RnD simulators.
  3. Supplier – This will include the component suppliers and the aggregate suppliers ( e.g. Engine by Cummins, Gearbox by Isuzu , axle by meritor ) who are handled by the vendor management and IBL team.
  4. OEM parts like battery, tyre etc are not considered here. Fuel and lubricants are also not considered here. They are industries by themselves.
  5. Plant – This is where the assembly happens and a finished product is rolled out. Quality assurance and testing happens here.

DOWNSTREAM

  1. It is the process taken care by Sales and Logistics ( Out Bound ) team. Production planning happens based on forecasting and Purchase Orders . The product from plant to dealer is delivered by OBL team. Usually the whole thing (Order to Dispatch) is taken care by ERP system.
  2. In case of international business the export team takes care of shipping and customs and other trade compliance like inco term.
  3. Many manufacturing companies also have Regional Warehouse to decrease transit time .
  4. Dealer/Distributor -They act as channel partners for manufacturers and generate leads through reach out program and marketing. They also take care of the aftersale and resale of vehicles .
  5. Finance/Insurance- Banks and NBFCs look after the financial need of customers through their auto division. Insurance is a regulatory requirement which is mandatory for all vehicles.
  6. Body Manufacturers play an instrumental role in Commercial Vehicle industry in making customized body based on specific application (Tanker,Bulker etc) as per regulatory norms.
  7. Finally the scrapping of vehicles is done ending the life cycle of the product. Thus Automobile as a product has a long value chain with many stakeholders directly or indirectly adding value
  8. However, the Customer and Driver remain the keystone species as one purchases the product and the other uses it.

For finding similar topics, you should check: technology, automotive