Auto industry analysis

By- Arabinda Kar

PGDM II Year
 Automobile industry

 Tenth largest in the world with an annual production of

approximately 2 million units

AUTOMOBILE

PASSENGER COMMERCIAL
2 WHEELER 3 WHEELER
VEHICLE VEHICLE
Trends in Automobile sector
 Continue………….

Automobile Production Trends (Number

of
Vehicles)
Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Passenger
723,330 989,560 1,209,876 1,309,300 1,545,223 1,762,131
Vehicles
Commerci
203,697 275,040 353,703 391,083 519,982 545,176
al Vehicles
Three
276,719 356,223 374,445 434,423 556,126 500,592
Wheelers
Two
5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,049
Wheelers
Grand
6,279,967 7,243,564 8,467,853 9,743,503 11,087,997 10,833,948
Total
Automobile Domestic Sales Trends
(Number
of Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger
707,198 902,096 1,061,572 1,143,076 1,379,979 1,547,985
Vehicles

Commercia
190,682 260,114 318,430 351,041 467,765 486,817
l Vehicles

Three
231,529 284,078 307,862 359,920 403,910 364,703
Wheelers

Two
4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,248,589
Wheelers
Grand
5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,648,094
Total
 Automobile Exports Trends (Number of

Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger
72,005 129,291 166,402 175,572 198,452 218,418
Vehicles

Commercia
12,255 17,432 29,940 40,600 49,537 58,999
l Vehicles

Three
43,366 68,144 66,795 76,881 143,896 141,235
Wheelers
Two
179,682 265,052 366,407 513,169 619,644 819,847
Wheelers

Grand Total 307,308 479,919 629,544 806,222 1,011,529 1,238,499

Analysis of current scenario

 High interest rates, high domestic oil prices and

inadequate vehicle financing have continued to affect
the overall automobiles sector
 The current slowdown in economic growth and
automobiles industry has further deteriorated due to the
global financial market crisis which has created
volatility in stock markets and exchange rates and
aggravated lack of liquidity
Continued…....

 Automobile companies are reducing

production by shutting plants for a few
days to avoid inventory build-up and in
anticipation of seeing further downside
 Four wheeler industry performance
 Volumes plummeted 23.6% to 100k in Nov’08, led by a 21.2%
decline in volumes of A2 segment (55% of domestic market) to 61k
units
 The overall industry de-grew by 8.1% to135k units in Nov’08.
Two wheeler Industry performance

 volumes declined by 14.7% to 567k units as compared

to 665k units in Nov’07
The Key player………….
 Bajaj Auto Limited

 BAL Auto is the second largest two-wheeler

manufacturer in India with a market share of
more than 20%
 Financials    
Year to March FY08 FY09E
Revenues (INR mn) 90,455 94485
Rev. growth (%)   -0.4
EBITDA (INR mn) 12,929 11,383
Net profit (INR mn) 7,558 6,527
shares outstanding (mn) 144.7 144.7
EPS (INR) 52.2 45.2
EPS growth (%)   -13.4
P/E (x) 5.3 6.1
EV/EBITDA (x) 3.1 3.1
ROACE (%) 42.6 35.5
ROAE (%) 54.6 43.6
Growth metrics (%) FY09E

Revenues -0.4

EBITDA 11.45

PBT -8.3

Net profit -1.7

EPS -13.1
Thank You !