The automobile industry in India has grown significantly over the past few decades. It started with only two major players and was highly regulated, with import restrictions and high duties. Liberalization in the 1990s led to more players entering the market, both domestic and foreign, and greater competition. Key segments now include two-wheelers, passenger vehicles, commercial vehicles, and three-wheelers. The industry is largely domestically focused but exports have also increased substantially in recent years, with passenger vehicles becoming a leading export category. Overall production and sales have grown at a compound annual rate of over 15% with two-wheelers maintaining the largest market share.

1. Presentation on Landscape of Automobile Industry in India Consulting Club

2. Evolution of Automobile Industry Initial Years Manufacturing was licensed High Customs duty on import Steep excise duties & sales tax 2 Major players: Premier Automobiles Ltd & Hindustan Motors 1980s Entry of MUL, better product, with government support Seller’s Market Long Waiting Periods Early to mid 90s Seller’s market and long waiting periods Delicensing in 1993 Removal of capacity restrictions Decrease in customs & excise Auto finance boom- more players (foreign banks & non banking companies, better schemes. Mid 90s – Early 2000s Buyers market Increase in Indigenization Easy Auto finance Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market

3. AUTOMOBILE 2 WHEELER 3 WHEELER PASSENGER VEHICLE COMMERCIAL VEHICLE MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS I.C.V. M.C.V. H.C.V.

4. Trends in the automobile sector… CAGR 15.4% CAGR 14.2% CAGR 39% Domestic Sales have been growing strongly Exports have nearly tripled in the last 5 years Largest three wheeler market in the world 4 th largest passenger vehicle in Asia 4 th largest tractor in the market 5 th largest commercial vehicle market in the world

5. Segment wise market share… Two Wheeler Three Wheeler Passenger vehicles CVs The industry has not experienced much change in its structure over the last 6 years Two- wheelers form the major share of domestic sales Passenger vehicles lead the exports market(57.4%) 2 wheelers form the bulk of exports as well, but are losing share to Passenger vehicles The growth in the two wheeler market is driven by the motorcycle market and is expected to grow at 14-15 % YOY

6. The Key Players… Two wheeler Passenger vehicle Commercial vehicles TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors Passenger vehicle TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors Two Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors Three Wheeler Bajaj Auto, Piaggio India

7. Favorable Demographics Improving income curve Reducing interest rates Cost Pressure High Expectations Inadequate Infrastructure Development KEY CHALLENGES KEY ENABLERS Key Focus Areas Product development ( includes collaboration, new products developed) Vendor base (quality of vendors, skill levels , size etc.) Manufacturing capability ( quality levels, productivity & skill levels, technology ) Service levels Supply chain Labor law Leverage IT Key Features of Future Auto Policy Foreign Direct Investment Import tariff Incentives for Research and Development (R&D) Environmental Aspects Other measures

9. Domestic Market Share for 2009-10 Passenger Vehicles 15.86 Commercial Vehicles 4.32 Three Wheelers 3.58 Two Wheelers 76.23

11. Automobile Production Trends (Number of Vehicles) Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Passenger Vehicles 989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,593 2,351,240 Commercial Vehicles 275,040 353,703 391,083 519,982 549,006 416,870 566,608 Three Wheelers 356,223 374,445 434,423 556,126 500,660 497,020 619,093 Two Wheelers 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,419,792 10,512,889 Grand Total 7,243,564 8,467,853 9,743,503 11,087,997 10,853,930 11,172,275 14,049,830

12. Automobile Domestic Sales Trends (Number of Vehicles) Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Passenger Vehicles 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,949,776 Commercial Vehicles 260,114 318,430 351,041 467,765 490,494 384,194 531,395 Three Wheelers 284,078 307,862 359,920 403,910 364,781 349,727 440,368 Two Wheelers 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,371,231 Grand Total 6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,292,770

13. Automobile Exports Trends (Number of Vehicles) Category 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Passenger Vehicles 129,291 166,402 175,572 198,452 218,401 335,729 446,146 Commercial Vehicles 17,432 29,940 40,600 49,537 58,994 42,625 45,007 Three Wheelers 68,144 66,795 76,881 143,896 141,225 148,066 173,282 Two Wheelers 265,052 366,407 513,169 619,644 819,713 1,004,174 1,140,184 Grand Total 479,919 629,544 806,222 1,011,529 1,238,333 1,530,594 1,804,619