Booz & Company

Delhi, 2011

India Automotive Market 2020

This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

The key 5s1. Going forward, India is a key pillar of global automotive market - policy, actions and strategies of players in India will have a fundamental impact on the global auto landscape 2. By 2015, India will exceed every major European market inc. Germany, France and UK in automotive sales - making India the 4th largest automotive market by volume in the world 3. Over the next 20 years, India will be part of global automotive triumvirate - the global BIG 3 4. In fact, we expect the India automotive sales to exceed the US market by mid 2030s 5. The global automotive game will be pretty much decided by twin forces for China and India

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India is booming and projected to maintain the trajectoryRegional: Percentage of World GDP2004India 2% Other 20% Japan 12% China 4%

Real GDP Growth2005-2020

4.0

China Growth Rate (Base=2005)3.5

India

US 28%

EU 34%

3.0

2050 EstimateOther 10%India 17%

2.5

2.0

Thailand

US 26%

China 28%

1.5

United Kingdom Germany

EU 15% Japan 4%

1.020 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20

Source:

Global Insights Database, Business Week, Booz & Company analysisSummary.ppt Prepared for client name

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Emerging markets are transforming the economic landscape could the future repeat the past ?Percent Contribution of India & China, US, Western Europe and UK to World EconomyPercentage Contribution to World Economy 80% 80% (15002050 AD)

60% 60%India & China India & China

40% 40%Western Europe (excluding UK)

US

20% 20%

UK

Western Europe (excluding UK) UK

0% 1500 1800

1850 1850

1900 1900 Year

1950 1950

2000 2000

2050

Note: UK, US and W. European countries do not include GDP from former British colonies Source: The World Economy-Historical Statistics; Goldman Sachs BRIC Report; Booz & Company research and analysisBooz & Company DATE Summary.ppt Prepared for client name

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An assessment of parallels with markets such as China strengthen our belief in tomorrowGDP Growth$3,000 $3,000

GDP Per Capita Growth$90,000 $80,000

FDI Trends India and China

$2,500

$2,500 $70,000

$2,000

$2,000

$60,000

In $ Bn

In $ Mn1 3 5 7 9 11 13 15 17 19 21 23 25 27

$1,500

In $

$50,000 $40,000 $30,000 $20,000

$1,500

$1,000

$1,000

$500

$500 $10,000

$0 1 3 5 7 9 11 13 15 17 19 21 22 25 27

$0

$0 1 3 5 7 9 11 13 15 17 19 21 23 25 27

Years Since Liberalization

Years Since Liberalization China 1979 India 1991

Years Since Liberalization

Source:

Economic Intelligence Unit, Booz & Company analysisSummary.ppt Prepared for client name

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The twin pillars of the global economy, India & China, will define the economic landscape for generations to comeGDP Trends2005 Constant Prices ($Trillion) $ Trillion 25 China Growth relative to 2005 11 10 9 20 15 8 7 6 10 India Japan 5 Germany Russia 0 2000Source:

Real GDP Growth(Base = 2005)

China India

5 4 3 2 1 0 2000 2010 2020 2030 Pakistan Russia Germany Japan 2040

Pakistan 2010 2020 2030 2040

Global Insight Database, Booz & Company analysisSummary.ppt Prepared for client name

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Wealth is being generated via a positive structural shift in the economyShift in GDP composition by sector (1950 to 2020E)100% 90% 30% 80% 35% 39% 48% 14% 49% 50%

% contribution to GDP

70% 60% 50% 40% 30% 20% 29% 10% 0% 1950 1990 2000 2007 2012 22% 15% 56%

36% 38% 37% 40% 42%

11%

8% 2020

AgricultureSource: Global Insights Database, Economic Intelligence Unit, Booz & Company analysisSummary.ppt Prepared for client name

Industry

Services

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Industry is likely to benefit from the change in consumption pattern of an increasingly prosperous societyPrivate Consumer Spending1994-2015Index 100%15 14

Private Consumption GrowthBase - 1994

Transport / Comm.

29% 40%

Food & Beverages

13 12 11

% consumption of total

55%8% 7% 16% 5% 20% 13% 4%

Recreation

Clothing & Footwear Housing Health

10 9 8 7 6

Total Consumption

6% 15% 3% 11%

23%

Transport / Comm.

5 4

Food & Beverages

5% 19%

Recreation / Education Miscellaneous

3 2 1 0 1990 1995 2000 2005 2010 2015

3% 6% 1994Note: Source:

3% 9% 2005

2015

Miscellaneous includes personal care goods and other services Central Statistics Organization (GOI), Booz & Company analysisSummary.ppt Prepared for client name

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This rise in per capita GDP will lead to higher vehicle ownershipCars / 1000 People Versus GDP / CapitaCars / 1000 People 600 550 500 450 400 350 300 250 200 150 100 50 0 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 GDP / CapitaSource: Economist Intelligence Unit; Booz & Company analysisSummary.ppt Prepared for client name Booz & Company DATE

1990 - 2013 Germany

USASaturated penetration levels in developed economies

Russia

India China

Rising per capita income leading to increased penetration; trend expected to continue given low current levels

8

The result: India is an anchor of future growth in the auto industryGDP Growth by Country2010 2020

> 5% projected GDP growth 3.5 % - 5% projected GDP growth < 3.5% projected GDP growthSource: Global Insight Database, Booz & Company analysisSummary.ppt Prepared for client name

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Automotive sales are destined to resonate with global economic shift - India is the place to be for the global OEMsAutomotive Sales by Geography(Passenger Vehicles, Commercial Vehicles and Two Wheelers)

1980 Market size: 60 M units Asia & Japan: 7% Europe: 42% NA: 41%

2009Market size: 102 M units Asia & Japan: 45% Europe: 32% NA: 18%

2020

Market size: 205 M units Asia & Japan: 65% Europe: 20% NA: 15%

Shift in center of gravity

1) Source:

Includes passenger vehicles, commercial vehicles and two-wheelers Global Insight Database, March 2009; Wards Auto; Booz & Company analysisSummary.ppt Prepared for client name

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Indias car market has the potential to grow up to 6+ millions units annually by 2020Passenger vehicle sales in India (2001 2020)Million Units 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Italy Car Sales 2008 - 1.9 M Units Spain Car Sales 2008 - 1.6 M Units Germany Car Sales 2008 - 3.1 M Units

Aggressive

Base Case Consensus Conservative

Note: Note:

Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etc Aggressive scenario 14% CAGR upto 2015, after which market stabilizes (based on similar growth seen in the Chinese markets under similar macroeconomic conditions) Base Scenario 8% CAGR over 2009-2020; based on historical growth trends of the Indian car market Conservative Scenario 6% CAGR; car sales negatively impacted by economic downturn or unfavorable government policies (high interest rates, financing not easily accessible, etc) Source: Global Insight database, Booz & Company AnalysisBooz & Company DATE Summary.ppt Prepared for client name

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India will soon be bigger than most other marketsWestern Europe (1998) and India (1998)4,500 4,000 3,500 Sales Volume (in thousands of units) 3,000 2,500 2,000 1,500 1,000 500 0DI A D S G DO M IT AL Y SP AI N G AL RK LA N DE N CE EL AN AN C AN BE LG IU RL AN RW A TR G ER M SW E AU S ZE R PO RT G R DE N FI NL A FR IN M A EE IN U ND IA E M D Y D Y

3920

2,534 2,488 2,289

1,446

640

538

530

369

320

316

280

196

192

174

147

141

K

NE TH E

Source:

Global Insight Database, Booz & Company analysisSummary.ppt Prepared for client name

UN

IT ED

SW IT

NO

IR

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India will soon be bigger than most other marketsWestern Europe (2009) and India (2009)4,500 4,035 4,000 3,500 Sales Volume (in thousands of units) 3,000 2,500 2,000 1,500 1,071 1,000 581 500 0DI A D S G DO M IT AL Y SP AI N G AL RK LA N DE N CE ND IA E M Y D Y BE LG IU RL AN G ER M SW E AU S ZE R G R PO RT DE N FI NL A FR IN EL AN IR AN C AN RW A TR M A EE IN U D

2,678 2,3602,262 2,216

451

349

294

247

236

203

131

126

102

64

K

NE TH E

Source:

Global Insight Database, Booz & Company analysisSummary.ppt Prepared for client name

UN

IT ED

SW IT

NO

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Much earlier than 2020, India will exceed the major EU marketsWestern Europe (2015) and India (2015)5,500 5,070

4,500 Sales Volume (in thousands of units) 3,693 3,500 2,598 2,566 2,500 2,434 1,624 1,500 617 500 608 342 341 323 299 245 203 171Y

160ND

151D

DI A

G DO M

S

IA

E

D

IT AL Y

SP AI N

G AL

M

CE

LA N

BE LG IU

RL AN

G ER M

SW E

AU S

ZE R

PO RT

G R

DE N

NO

FI NL A

FR

IN

K

NE TH E

Note: Source:

Forecasts for 2015 Global Insight Database, Booz & Company analysisSummary.ppt Prepared for client name

UN

IT E

SW IT

D

IR

EL AN

AN C

RW A

TR

EE

M A

IN

U

-500

DE N

AN

RK

Y

D

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India and China dwarf existing automotive markets such as Germany or UKAutomotive sales volume by country2030

Number of unit sales> 10 M 3 M - 10 M 1M-3M $75K

$25K - $35K

Global Insight 2009, Booz & Company AnalysisSummary.ppt Prepared for client name

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The market of tomorrow will reflect increased prosperity of the nationIndian household income & car sales distribution2030% of households40%

% of total car sales60%

Household income distribution Distribution of car sales by segment30% 40% 33% 20% 20% 10% 11% 5% 2% 0% 0% 30% 50%

20% 12% 5% 0% 12% 10%

Car Segments Income distributionSource:

A < $1K $1K - $3K

B $3K - $5K

C $5K - $10K

D $10K - $15K

E&F $15K - $25K

MPV

SUV

PUP $35K - $50K

Other $50K - $75K > $75K

$25K - $35K

Global Insight 2009, Booz & Company AnalysisSummary.ppt Prepared for client name

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Interestingly, Indias market is expected to overtake the US auto sales by ~2035Light Vehicle Sales Projections - US, China, IndiaThousand Units 60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2004 Chinese automotive sales exceeds U.S Indias automotive sales is expected to exceed U.S CHINA

2004-2040, Thousand Units

INDIA UNITED STATES

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

Note: Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etc Source: Global Insight Database, Booz & Company analysesBooz & Company DATE Summary.ppt Prepared for client name

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Contacts

Vikas Sehgal Partner, Booz & Company 225 West Wacker Drive, Suite 2270 Chicago, IL 60606-1228 Tel (312) 578 4828 Vikas.sehgal@booz.com

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