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  1. 1. <ul><ul><li>Update on Auto & Auto ancillary Industry </li></ul></ul><ul><li>Commercial Vehicles </li></ul><ul><li>Passenger Car & Utility Vehicles </li></ul><ul><li>Two Wheeler </li></ul><ul><li>Auto Ancillary </li></ul>
  2. 2. Auto Industry Auto Industry PC CV 4-wheeler 2-Wheeler
  3. 3. Commercial Vehicles <ul><li> Positive growth seen in following categories </li></ul><ul><ul><li>LCV goods (loads less than 3.5 T): + 19% </li></ul></ul><ul><ul><li>MCV goods (7.5T -12T): +15% </li></ul></ul><ul><ul><li>Passenger vehicles (across all tonnages): + 20% across categories </li></ul></ul><ul><li>Negative trends seen in following categories </li></ul><ul><ul><li>LCV (3.5-7.5T): (10.4%) </li></ul></ul><ul><ul><li>MCV (12T – 16.2T): (3.4%) </li></ul></ul><ul><ul><li>HCV (16.2T – 26.4T ): (10.7%) </li></ul></ul><ul><ul><li>HCV (>26.4T ): (6.1%) </li></ul></ul><ul><li>The negative trend is due to a base effect wherein the growth in sales in previous year was highest in these categories </li></ul>
  4. 4. MHCV monthly sales trend <ul><li>Overload ban had raised sales volumes by over 20%. </li></ul><ul><li>Sales decline in FY’08 was visible due to higher base and sudden increase in capacity in the previous year. </li></ul><ul><li>MHCV goods segment showed a decline of 4.5% for FY08. </li></ul><ul><li>Trend in freight rates and diesel prices </li></ul><ul><li>Freight rates trends does not shown any negative trend </li></ul>
  5. 5. Passenger Cars & Utility vehicles <ul><li>The passenger car industry witnessed a growth of 12% in FY2008, due to plenty of new model launches. </li></ul><ul><li>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. </li></ul><ul><li>Capex over next 2 -3 years is expected at Rs.200 – 230 bn </li></ul><ul><li>Utility vehicle register strong growth of 11% in FY 2008. Passenger car monthly sales trend </li></ul>
  6. 6. <ul><li>Demand for 2W is slowing down. Domestic 2W sales fell by 4.9% for FY2008. </li></ul><ul><li>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. </li></ul><ul><li>Entry of new players and new model launches in the heavy ungeared scooter segments can potentially cannibalize motor cycle demand, thereby affecting urban demand. </li></ul><ul><li>Export demand to rise from developing nations like Bangladesh, Columbia, Sri Lanka, Philippines. </li></ul><ul><li>Competition to intensify and margins to remain under pressure. </li></ul>Two Wheeler segment
  7. 7. Two wheeler Sales by Segment Two wheeler monthly sales trend
  8. 8. Budget Impact <ul><li>Excise duty on small cars, Buses and their chassis, 2/3 wheelers reduced from 16% to 12% </li></ul><ul><li>Reduction in CST from 3% to 2% </li></ul><ul><li>Small cars & 2/3 wheelers to be cheaper </li></ul><ul><li>Bus manufacturers to benefit </li></ul><ul><li>Positive for Tata Motors, Ashok Leyland, Maruti Suzuki, Bajaj </li></ul><ul><li>Ancillaries to benefit from reduction in CST & sales in replacement market </li></ul><ul><li>Customs duty on steel melting scrap and aluminium scrap reduced to Nil </li></ul><ul><li>Will benefit foundries etc who use steel scrap (positive for Ennore Foundries, Bharat Forge, Amtek Auto) </li></ul><ul><li>No change in Peak Customs duty </li></ul><ul><li>Reduction in customs duty for key raw materials for tyre </li></ul><ul><li>Marginal positive impact on tyre manufacturers </li></ul>
  9. 9. Auto Ancillary <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>Margins to remain under pressure as the anticipated slowdown in automobile demand would pressurize component players to absorb any further increase in input costs. </li></ul><ul><li>Demand for auto ancillary industry </li></ul>
  10. 13. Working Capital Fund BASEd Nonfund Based CC OD WCDL Export Credit LC BG Buyers Credit
  11. 14. SWOT OF PRODUCT PORTFOLIO <ul><li>A very good Penetration in the Market </li></ul><ul><li>and presence in terms of back up branch </li></ul><ul><li>support </li></ul><ul><li>2. Export products are smooth selling hot </li></ul><ul><li>cakes </li></ul><ul><li>3. Non-Fund prodcuts are competitively </li></ul><ul><li>priced. </li></ul><ul><li>4. Only Bank to offer ECBs aggresively , </li></ul><ul><li>Japanese and Korean line available , ideal </li></ul><ul><li>for North market where there would be some </li></ul><ul><li>connection </li></ul>STRENGTHS
  12. 15. <ul><li>INR term loan and CC COF very </li></ul><ul><li>high so priced out of market. </li></ul><ul><li>2. Lower penetration in Tier-2 Vendors, </li></ul><ul><li>that is where next pahse of growth will </li></ul><ul><li>come </li></ul>WEAKNESS
  13. 16. <ul><li>Aggresively push Non-fund products like LC , Buyers </li></ul><ul><li>credit in conjunction with Export fund based products </li></ul><ul><li>to reduce the overall coat of the client </li></ul><ul><li>2. BG model can be replicate for other manufacturers </li></ul><ul><li>3. Untapped markets up North </li></ul>OPPORTUNITIES
  14. 17. <ul><li>Competition from PSUs as well as MNC banks </li></ul><ul><li>interms of pricing . </li></ul><ul><li>2. PSUs also becoming nimble in disbursement so that </li></ul><ul><li>can take the sheen away from our USP. </li></ul><ul><li>3. Players like Barclays will keep on getting more </li></ul><ul><li>aggressive to ghet the market share. </li></ul>THREATS
  15. 18. Outlook <ul><li>Commercial Vehicle </li></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>Thrust in agriculture would benefit both goods and passenger vehicles. </li></ul></ul><ul><li>Two Wheelers </li></ul><ul><ul><li>Due to retention of high interest rates, short term improvement in 2W is tough. </li></ul></ul><ul><li>Passenger Cars & Utility vehicles </li></ul><ul><ul><li>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. </li></ul></ul>
  16. 19. Thank You
  17. 20. ANNEXURES
  18. 21. Annexure: Commercial Vehicle Back
  19. 22. Annexure:MHCV goods vehicle Back
  20. 23. Annexure: Trend in freight rates and diesel prices Back
  21. 24. Annexure: Demand for Auto Ancillary Back