Auto Industry Auto Industry PC CV 4-wheeler 2-Wheeler
Positive growth seen in following categories
LCV goods (loads less than 3.5 T): + 19%
MCV goods (7.5T -12T): +15%
Passenger vehicles (across all tonnages): + 20% across categories
Negative trends seen in following categories
LCV (3.5-7.5T): (10.4%)
MCV (12T – 16.2T): (3.4%)
HCV (16.2T – 26.4T ): (10.7%)
HCV (>26.4T ): (6.1%)
The negative trend is due to a base effect wherein the growth in sales in previous year was highest in these categories
MHCV monthly sales trend
Overload ban had raised sales volumes by over 20%.
Sales decline in FY’08 was visible due to higher base and sudden increase in capacity in the previous year.
MHCV goods segment showed a decline of 4.5% for FY08.
Trend in freight rates and diesel prices
Freight rates trends does not shown any negative trend
Passenger Cars & Utility vehicles
The passenger car industry witnessed a growth of 12% in FY2008, due to plenty of new model launches.
Compact segment recorded growth of 14.2% in FY2008 and Mid size segment grew by 14.73 in FY2008, mainly backed by recently launched models Spark, i-10, Maruti SX4 and Mahindra Renault Logan.
Capex over next 2 -3 years is expected at Rs.200 – 230 bn
Utility vehicle register strong growth of 11% in FY 2008. Passenger car monthly sales trend
Demand for 2W is slowing down. Domestic 2W sales fell by 4.9% for FY2008.
The drop in two wheeler segment can be attributed to slow down in Finance disbursements, economic slowdown, high interest rate scenario, subdued demand from saturated urban markets.
Entry of new players and new model launches in the heavy ungeared scooter segments can potentially cannibalize motor cycle demand, thereby affecting urban demand.
Export demand to rise from developing nations like Bangladesh, Columbia, Sri Lanka, Philippines.
Competition to intensify and margins to remain under pressure.
Two Wheeler segment
Two wheeler Sales by Segment Two wheeler monthly sales trend
Excise duty on small cars, Buses and their chassis, 2/3 wheelers reduced from 16% to 12%
Reduction in CST from 3% to 2%
Small cars & 2/3 wheelers to be cheaper
Bus manufacturers to benefit
Positive for Tata Motors, Ashok Leyland, Maruti Suzuki, Bajaj
Ancillaries to benefit from reduction in CST & sales in replacement market
Customs duty on steel melting scrap and aluminium scrap reduced to Nil
Will benefit foundries etc who use steel scrap (positive for Ennore Foundries, Bharat Forge, Amtek Auto)
No change in Peak Customs duty
Reduction in customs duty for key raw materials for tyre
Marginal positive impact on tyre manufacturers
Production in auto component industry estimated at Rs.624 bn in 2007-08 (Rs.891 bn in terms of turnover), a growth of 12% over Rs. 560 bn in 2006-07.
OEM offtake in production value terms is estimated at Rs.393 bn (comprising 70% of total production)in 2006-07 and is estimated to grow by 7% in 2007-08, due to slow pace of growth in Passenger cars & UV and Commercial vehicle segment.
Margins to remain under pressure as the anticipated slowdown in automobile demand would pressurize component players to absorb any further increase in input costs.
Demand for auto ancillary industry
Working Capital Fund BASEd Nonfund Based CC OD WCDL Export Credit LC BG Buyers Credit
SWOT OF PRODUCT PORTFOLIO
A very good Penetration in the Market
and presence in terms of back up branch
2. Export products are smooth selling hot
3. Non-Fund prodcuts are competitively
4. Only Bank to offer ECBs aggresively ,
Japanese and Korean line available , ideal
for North market where there would be some
INR term loan and CC COF very
high so priced out of market.
2. Lower penetration in Tier-2 Vendors,
that is where next pahse of growth will
Aggresively push Non-fund products like LC , Buyers
credit in conjunction with Export fund based products
to reduce the overall coat of the client
2. BG model can be replicate for other manufacturers
3. Untapped markets up North
Competition from PSUs as well as MNC banks
interms of pricing .
2. PSUs also becoming nimble in disbursement so that
can take the sheen away from our USP.
3. Players like Barclays will keep on getting more
aggressive to ghet the market share.
Due to excise duty reduction on buses, bus chassis and trucks in Union Budget 2008-09, the passenger vehicle sub segment would receive a boost.
Thrust in agriculture would benefit both goods and passenger vehicles.
Due to retention of high interest rates, short term improvement in 2W is tough.
Passenger Cars & Utility vehicles
Domestic car volumes to grow 1.5 times GDP growth ,since average domestic volumes growth for last 5 years has been around 1.5 times GDP.
Annexure: Commercial Vehicle Back
Annexure:MHCV goods vehicle Back
Annexure: Trend in freight rates and diesel prices Back