17896323 Indian Automobile Industry Pest

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Analysis of Macro-environmental factors for Automobile Industry



Automobile: An automobile or motor car is a wheeled motor vehicle for transporting passengers; which also carries its own engine or motor.

History: •Introduced to India in the late 1890’s and the manufacturing industry onlytook off after independence in 1947. •The protectionist economic policies of thegovernment gave rise in the 1950

s to the Hindustan Motors Ambassador. •HindustanMotors and a few smaller manufacturers such as Premier Automobiles, Tata Motors,

Bajaj Auto, Ashok and Standard Motors held an oligopoly until India

s initial economic opening in the 1980

s. •The maverick Indian politician Sanjay Gandhi championed the need for a "people

s car"; the project was realized after his death with the launch of a state-owned firm Maruti Udyog which quickly gained over 50% market share. •Tata Motors exported buses and trucks to niche markets in the developing world.



AUTOMOBILE

2 WHEELER

3 WHEELER

PASSENGER VEHICLE

COMMERCIAL VEHICLE

L.C.V.

I.C.V.

H.C.V.

MOTORCYCLE

SCOOTERS

SCOOTERETTES

MOPEDS



Overview of Automobile Industry• The industry has grown at over CAGR of 14% p.a over the last 5 years. • In the year 2006-07, sales (domestic as well as exports) of the Indian automotiveindustry crossed the historic landmark of 10 million units.

• With the potential to emerge as one of the largest in the world. Presently, India is • 2nd largest two wheeler market in the world • 13th largest commercial vehicle

market in the world • 11th largest passenger car market in the world and is expected to be the 7th largestmarket by 2016 .

• The industry has emerged as a key contributor to the Indian economy. • The Indianautomotive industry is highly competitive with a number of global andIndian companies present in the market.



Automotive sales for 2002-07Sales(Million units)2007 2006 2005 2004 2003 2002 0 5 11.12Two Wheelers8,476,686

Sales in units (2006-07)

Share in Total Sales76.2%

CAGR (200207)14.5%

9.71 8.53 7.29 6.25 5.41 10 15Commercial Vehicles517,648 4.7% 26.7%

Passenger Cars Three-Wheelers

1,578,176

14.2%

16.7%

547,805

4.9%

20.5%



Automotive clusters in IndiaMajor automotive clusters - Mumbai-PuneNasik-Aurangabad (West), Chennai Bangalore-Hosur (South) and Delhi-GurgaonFaridabad (North)Delhi-Gurgaon-NoidaGhaziabad Ludhiana Haridwar

North / CentralAshok Leyland Force Motors Hindustan Motors Honda SIEL Kinetic Majestic Piaggio

Swaraj Mazda Eicher Hero Honda Honda ICML LML Maruti Suzuki Yamaha Tata Motors

SouthAshok Leyland Enfield Ford Greaves Hindustan Motors Hyundai M&M Tata Toyota Kirloskar TVS Motors Volvo

Pitampur Jamshedpur Rajkot-Halol Kolkata

EastMumbai-Pune-Nasik Aurangabad Hyderabad

West

Ashok Leyland Bajaj Auto DaimlerChrysler FIAT Force Motors GM Greaves Kinetic M&M Premier Skoda Tata Motors

Hindustan Motors Tata Motors

Chennai Bangalore Hosur

Source: SIAM, IMaCS analysis



Overview of Passenger Vehicles Market• Indian Passenger vehicle Industry has grown with CAGR of 15.5% from FY’2001-02 toFY’2006-07. Significant increase in competition due to entry of global players. Shrinking of mini car segment, and increasing share of compact cars in Indian market. Impressive growth of executive segment(D), with CAGR of 112% from FY’ 2001-02to FY’2006-07 Indian Passenger vehicle industry is undergoing significant market dispersion. Emergence of India as Global manufacturing base for mini and compact

cars. Exports from passenger vehicle segment has grown significantly, with a CAGR of 30% from FY’2001-02 to FY’2006-07.

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• • •



Domestic Passenger Vehicle IndustrySales2007 1379.1

Break-up of the Industry by Segment for 20071143.1

2006

2005

1061.3 000 units

22%

Passenger Cars, 78% SUVs/MUVs, 22%

2004

902.1

2003

707.2

78%

2002

675.1

0

500

1000

1500



Segment-wise Analysis of Passenger Vehicle MarketSegment Description Share in 2001-02 28% 54% 17% 0.2% 0.9% 0.0% Share in 2006-077% 70% 18% 3.8% 1.18% 0.02% CAGR

A B C D E F

Mini cars, up to 3400 mm length Compact cars, between 3401-4000 mm length Mid si

ze cars between 4001-4500 mm length Executive cars between 4501 - 4700 mm lengthPremium cars between 4701 - 5000 mm length Luxury cars - above 5001 mm length

-11% 22% 18.6% 112% 31.1% NA



Segment A Market share of Key Players in 2006-07 Maruti Udyog Ltd. TATA Motors Ltd. Hyundai Motor India Ltd. Mahindra & Mahindra Ltd. Totyota Others 46% 16% 14%7% 4% F 13% SUV D B C

Key Brands and Companies to which they BelongMaruti 800. Alto, Wagon-R, Swift (MSuzuki), Indica (Tata) Santro, Getz (Hyundai), Palio (Fiat India) Esteem, SX4 (MSuzuki) TATA Indigo, Verna, Elantra (Hyundai

), Honda City, Astra, Aveo, Optra (GM), Logan (M&M), Icon, Fiesta (Ford ), Cedia (HM), Petra (Fiat India) Civic (Honda), Opel Vectra (GM), Contessa (HM), SkodaOctavia, Mercedes C-class (Daimler Chrysler India) Sonata (Hyundai Motors),Honda Accord ,Corolla, Camry (Toyota Kirloskar), Mondeo, Superb (Skoda Auto), Mercedes E-class, 5 series (BMW India) Mercedes S-class, Maybach (DaimlerChrysler), BMW 7 Series Grand Vitara (MSuzuki),Safari (Tata), Tucsan (Hyundai Motors), CRV (Honda), Scorpio, C-fusion, Endeavour (Ford), Omni, Versa (MSuzuki), Sumo, IndigoMarina (Tata), Innova,Tavera, Bolero (M&M)

E

MUV



Indian Passenger Vehicle Market – Competitive Scenario

Passenger Cars Utility Vehicles Multi Purpose Vehicles

46% 2% 40%

16% 18% -

14% 1% -

7% 42% -

4% 21% -

1% -

10% -

1% -

<1%

-

4% -

-

% -

-

4th largest Passenger Vehicle Market in World



Overview of Two-wheeler and CVs Market• The total sales of the Indian two wheeler industry has grown at a CAGR of 14.5 per cent between FY’2001-02 and FY’2006-07. The motorcycles market had witnessed thefastest growth rate in the two wheeler segment, with a CAGR of 19.2%. Indian Two-wheeler market is characterized with intense competition with around 10 major players. Exports from two-wheeler industry has increased with a CAGR of 42.8%, from FY’200102 to FY’2006-07. The total sales of the Indian Commercial vehicles indust

ry has grown at a CAGR of 26.1% between FY’2001-02 and FY’2006-07. With increased industrial production and investments in real estate CVs market has witnessed goodgrowth. CV exports has grown from 12000 units in FY’2001-02 to 50,000 units in FY’200607, showing a CAGR of 33.2%. •

•

•

•

•

•



Segment-wise Analysis of Indian Two Wheeler MarketSegment A1 A2 A3 B2 B3 B4 C1 DescriptionScooter with engine capacity less than 75 cc Scooter with engine Capacity ,75-125 cc Scooter with engine capacity between 125-250 cc Motorcycle with engine capacity between 75-125 cc Motorcycle with engine capacity between 125-250 cc Motorcycle with engine capacity above 250 cc Mopeds

Share in 2001-02 5% 5% 12% 62% 5% 1% 10%

Share in 2006-07 0% 10% 1% 66% 17% 1% 5%

CAGR -33.9% 32.9% -27.7% 14.9% 44.8% 5.7% -2.7%



Segment-wise Analysis of Indian CVs MarketDescription (by Gross Vehicle Weight)

Share in 2001-02

Share in 2006-07

CAGR51.9%

Up to 3.5 tonnes (Pickups) 5 - 7.5 tonnes (LCV)

15%

36%

25%

9%

5.1%

7.5 – 12 tonnes (Intermediate CV) 12 – 16 tonnes( 4X2 FF/SF) 16 – 25 tonnes (Multi Axles) 25 tonnes and above (Tractor Trailers)

7%

9%

33.4%

29%

17%

14.6%

8%

21%

55.9%

8%

21%

9.7%



Market share of key players in 2006-07Market Share of key Players in Twowheeler Industry Hero Honda Bajaj Motors TVS Motor co. HMSIL Others 42% 27% 19% 9% 3% of Key • Market ShareIndustryPlayerskey Market Share of in CVs Players in Two-wheeler TATA Motors 64% Industry Ashok Leyland M&M Ltd. Eicher Motors Ltd. Others 16% 10% 6% 4%



Indian 2-Wheeler Market Competitive Scenario

Motorcycle

42% -

27% 15% -

19% 28% 82%

-

2% -

46% -

-

-

-

9% <1% 8% 10%

India is now the second largest two-wheeler market in the world



Economic Environment• • • • • • The Indian economy has grown at 8.5 per cent per annum. The manufacturing secthas grown at 8–10 per cent per annum in the last few years. More than 90 per centof the CV purchase is on credit. Finance availability to CV buyers has grown inscope during the last few years. The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs plying on Indian roads. Several Indian firms have partnered with global players. While some hav

e formed joint ventures with equity participation, others have entered into technology tie-ups. Establishment of India as a Manufacturing hub, for mini, compactcars, OEMs, and for auto components.

•



Key Market DriversIncreasing disposable incomes Rising aspirational levels Low interest rates. Wide variety and easy availability of Financing options. High sensitivity to Fuel prices Lack of urban & rural public transportation infrastructure Flourishing Service Sector

Key Trends

Market evolution from Mini cars to Hatchbacks to Compact Sedans now evident

Increasing customer emphasis on aesthetics and comfort.

Shrinking product life-cycles



Indian Automotive Industry – Development and GrowthPre 1983 • Closed market • Growth of market limited by supply • Outdated models 1983-1993 • Suzuki, Japan and GOI joint venture to form Maruti Udyog • Joint ventures withcompanies in commercial vehicles and components 1993-2007 • Delicencing of the sector in 1993 • Global major OEMs start assembly in India (GM, Ford, Honda, Hyundai, etc.) • Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels. • Easy auto finances. • Implementation of VAT. Players • Entry of

Global players

Players • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mahindra

Players • Maruti Udyog • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mindra



Current Political Environment• • • • • • Indian government auto policy aimed at promoting an integrated, phased and concive growth of the Indian automotive industry. Allowing automatic approval for foreign equity investment up to 100 per cent, with no minimum investment criteria. Establish an international hub for manufacturing small, affordable passenger cars as well as tractors and two wheelers. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. Assist developmen

t of vehicles propelled by alternate energy sources. Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activities. Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles.Promoting multi-modal transportation and the implementation of mass rapid transport systems.

• •



Social Environment• • • • • • • • • Growth in urbanization, 4th largest economy by PPP index. Upward migratiusehold income levels. Increase in PPP , led to the increase in market share ofcompact cars. 85% of Cars are financed in India (15% in China). Cars priced below USD 12000 account for nearly 80% of the market. Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. Indian customers are highly discerning, educated and well informed. They are price sensitive and p

ut a lot of emphasis on value for money. Preference for small and compact cars.They are socially acceptable, even amongst the well-off. Preference for fuel efficient cars with low running costs. The Tata Indica has the lowest running costat US 8.5 cents per mile.



Technological Environment• With the entry of global companies into the indian market, advanced technologies,both in product and production processes have developed. With the developmentor evolution of alternate fuels, hybrid cars have made entry into the market. Few global companies have setup their R&D centres in India. Major global players like audi, BMW,Hyundai etc have setup their manufacturing units in India. Government initiatives regarding tax rebates has led to global players setting up their

R&D centres in India. Govt. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements.

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NATRIP NetworkNew testing center for tractors & off-road vehicles, accident data analysis andspecialised driving training at RAE BAREILLY Hill Area driving training center and Regional In-Use vehicle management center at SILCHAR

New testing & homologation center at MANESAR

Up-gradation of VRDE at AHMEDNAGAR

New complete proving ground at INDORE Up-gradation of ARAI at PUNE

New test & homologation center near CHENNAI



Environmental ScenarioAutomotive regulations in India

Status of Indian RegulationFully / Partially aligned In process of being aligned Items / Regulations to becovered Total

Number of regulations43 32 39 114



Emission ComplianceEmission Standards StatusCars Bharat Stage IIAlready introduced in Metros:MiniMetros, from Sept, 2003

Two WheelersFrom April 1, 2005 Entire Country

C VsAlready introduced in Metros, MiniMetros .

Bharat Stage III

From April 1, 2005

From April 1, 2008

From April 1, 2005

Bharat Stage IV

From April 1, 2010

From April1, 2008

From April 1, 2010



Growth Forecasts as per Automotive Mission Plan• The size of the Indian automotive industry is expected to grow at a rate of 13%per annum over the next decade to reach around 31.96 Mn in 2016 from 11Mn in 2007. The total investments required to support the estimated growth are around US$120-159 billion by 2016. Vehicle Type Two wheelers Passenger vehicles Three wheelers CV Total Number sold (in million units) 27.80 2.65 0.87 0.64 31.96

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17896323 Indian Automobile Industry Pest

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