Indian Auto IndustryFacts• Second Largest two wheeler manufacturer in the world• Largest tractor and three wheeler manufacturers in the world• Fourth largest Commercial vehicle market in the world• Eleventh largest passenger car market in the worldTrends Growth Potential •Can become World’s third largest• Growth of exports of 33.57 % FY 2011-12. automobile market in 2030.• Output of commercial vehicles has grown 2.8 times compared to the 2.2 times •By 2016, Automotive sector can DOUBLE its increase in passenger cars percentage contribution to GDP from current• For every passenger car turned out, there levels of 5% (US$50 billion) to 10% ($180 billion). are almost 7 two-wheelers produced
The Growth Journey Pre 1983 1983-1993 1993-2012Closed market Japanisation - GOI- Delicensing of sector in Suzuki joint venture to 1993 form Maruti Udyog • Global major OEMs• Growth of market start assembly in Indialimited by supply • Joint ventures with (Toyota, GM, Ford, companies in Honda, Hyundai)• Outdated models commercial vehicles and • Imports allowed fromPlayers components Era of April 2001; alignment of globalisation and• Hindustan Motors Players duty on components evolution of India• Premier • Maruti Udyog and parts to ASEAN as a global levels• Telco • Hindustan Motors manufacturing hub • Implementation of• Ashok Leyland • Premier VAT• Mahindra & • TelcoMahindra • Ashok Leyland • Mahindra & Mahindra
Automotive Companies in IndiaMajor Indian Companies Major Multi-national companies
Auto Industry Numbers• Overall Market• Over all Production increased to 14.82 million vehicles in 2010-11 from 11.17 million vehicles in 2009-10• Passenger vehicles increased marginally from 1.95 million from 1.83 million• Two-wheelers increased from 9.11 million to 9.51 million• Domestic Market• Vehicles sold including PV,CV 2W and 3W in 2008-09 was 9.72 million as compared to 9.65 million in 2007-08.• Exports• Sales was 1.53 million units in 2008-09• As per the Automotive Mission Plan (AMP) 2006-2016 total turnover of the automotive industry in India would be in the order of US$ 122 billion-159 billion in 2016
Category wise numbers Dominated by Motorcycles 80% , Scooters 14% Mopeds 6% Two Wheeler Domestic - 7.25mn units . Hero mocorp.35% & Bajaj 32% share CAGR – 9.5% Exports 819000 units (07-08) . Bajaj Auto 59% TVS 17% share CAGR – 41% Dominated by Cars 78% , MUV/SUV 22%Passenger Vehicles Domestic – 1.5mn units Maruti-46% Tata-15% Hyundai 14% CAGR -14.8% Exports - 217000 units (07-08) Maruti 66% Hyundai 24% CAGR – 26% Dominated by M&HCV – Goods 48% Passenger 38% , Rest by LCV -14%Commercial Vehicles Domestic – 487 thousand units , Tata-62% Ashok Leyland -15% CAGR- 22% Exports – 59 thousand units, Tata 67% Ashok Leyland 12% CAGR -30.6% Dominated by Passenger Carriers with 64% share , Goods Carrier -36% Three Wheeler Domestic – 365 thousand units , Bajaj -42% Piaggio-41% CAGR- 10.5% Export – 141 thousand units , Bajaj -97% CAGR -44.5%
The Indian Auto Components Market• Original Equipment Manufacturers (OEMs)• Replacement Parts Production and Distribution : e.g. Air filters, oil filers and replacement lights• Rubber Fabrication : tyres, hoses, belts etc.• Estimated component market size is US$ 8.7 bn• The exports of auto components industry has grown at a rate of nearly 30 per cent CAGR over the last four years.
Second Hand Automobile Market• Used car market demand : 1.4 million cars annually• Market Structure : – Organized : 10% – Unorganized : 90% • Vendor Based – 30% • Direct Dealings – 70%• Certified used car dealers in India are – Maruti TrueValue, Honda Auto Terrace, Ford Assured, Toyota U Trust, Hyundai Advantage, Mahindra and Mahindra’s First Choice, General Motors - Chevrolet-OK• Unorganized market lacks services like -warranties, OEM equipments, insurance and taxes• Second hand market expected to grow at 12-15 per cent in the next five years to touch a robust 2.5 million units and a turnover of Rs 50 thousand crore• Estimations are that 50 percent of the used cars sales will be brought under organized car market by 2013
Economic Factors 1 year 1-5 year 5-10 years •Investment in •Growing working•Increased access to Infrastructure spending population (441 millioncredit and lower interest can boost the people in 2015/16)loans commercial vehicles segment. •Upward migration of household income levels (600 million people have annual income of more than $10,200) •Middle class expanding by 30 - 40 million every year Can propel growth
Economic Factors 1 year 1-5 year 5-10 years •Non- availability of •Non-availability of Key supplier base with•Impact of delayed raw material (like Steel) demanded capabilitymonsoon (85% of at cheap price. (Quality and Quantity).normal, subsequentimpact on paddy •Poor execution ofcultivation) on rural Infrastructuredemand. •Possible increase of interest rates (by 2-2.5% investments. BPLR) because of (Construction of planned government Highways of 16km per borrowing. day against the target of 32 km per day) •Increase in crude oil price($ 35/barrel to $ 70/ barrel in 14 months). Can Stunt Growth
Social Factors • A perfect marriage of rise in disposable income• Rapid Urbanization of semi urban regions and demographic dividend (From US$ 556 per• annum US$ 1150 by 2015) Rising aspirational levels. Improvement in living standards of middle class• Increased spending on Fashion & lifestyle comforts.• Seeking “Value for money”- consumer behavior• Increasing customer emphasis on aesthetics and comfort.
FUTURE GROWTH According to the Society of Indian Automobile Manufacturers, •Annual vehicle sales are projected to increase to 5 million by 2015 •more than 9 million by 2020. •By 2050, India is expected to top the world in car volumes with approximately 611 million vehicles on the nations roads.
India : A Developing Hub for Compact Cars Compact cars account for 70% of the total car market. Compact car sales increasing at about 20% each year Excise duty on small cars increased from 22% to 24% in the present budget. Maruti Suzuki : Tata Motors : • New car plant to make 2,50,000 cars per Tata Nano became a big success gaining annum (total 10,00,000 cars/annum) worldwide popularity with Tata planning to • total investment worth 6,000 crores. increase capacity Hyundai : Already a big player in the small car segment Toyota : Increase capacity to 600,000 cars per • Toyota Kirloskar motors planning to launch annum over next 1 year. its own small car in India by 2013• plans to hire 877 more workers to add a third shift at its Montgomery, Ala. plant General Motors : Nissan : • New Capacity to manufacture small cars at • Micra, UK India its Talegaon, Maharashtra plant with 80% local inputs. – Four more models in India, involving a total Brought in Spark small car in 2007 investment of over Rs 2,000 crore. Nissan-Renault : Ford : 50:50 JV, to make 400,000 cars a year with • Plans to unveil its new small car with 1.2 ltr an investment of over US $ 1 billion. engine by 2013 Coming up with the $2500 car to compete with Tata Nano in 2013. Honda : Investing US $ 250 million in a new plant in VW : Rajasthan with capacity of 60,000 car per • Investing 500 million euro to import parts year (First car to roll out in 2009). from India for next five years
Break through future trends•India will be a Automotive hub, led by small cars and auto component domains•Export of automotive components to ASEAN,BRIC,EU and USA for OEMs as well asAftermarket•Booming Automobiles (Particularly cars) second sales and remodeling•Increased deployment of IT-enabled Automobile support systems like GPS,ABS,ASR andSafety systems.•Quality Certification (Deming, Six Sigma,TQM,TS16949) amongst suppliers have attainedcritical mass and the entire market will follow to get quality certifications.•Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisitionservices•Alternate fuel (Bio fuel, electricity) and environment friendly green engines (Bharatemission norms)
References• www.acmainfo.com• www.wikipedia.org• www.siamindia.com• www.ibef.org• Ernst & Young Auto Track• www.economywatch.com• www.business-standard.com• The Economic Times• Hindu Business Line• www.automobileindia.com• automobiles.mapsofindia.com