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06
PASSENGER
VEHICLES
Highlights
Overview
As of FY2016, India was the world’s sixth-largest motor vehicle producer. It also ranked as the world’s
sixth-largest passenger vehicle (PV) manufacturer in 2015, claiming a 4.9% share in global car
production. The share of passenger car sales in the PV segment declined from 81% in FY2012 to 74% in
FY2016 as a result of consumer preferences shifting towards micro SUVs, which are perceived as more
comfortable on India’s pot-holed roads. The share of micro-SUV sales in total PV sales averaged 17.6%
between FY2012 and FY2016, rising from 12% in FY2012 to 20% in FY2016. The market share of the van
segment has remained almost unchanged over the period.
Outlook
The PV subsector enjoys good mid- to long-term prospects in India because of the low penetration of
passenger vehicles, the country’s favourable demographic profile, and the strengthening of the
middle class based on double-earner nuclear families. According to government estimates, India has
potential to be the world’s top production destination and market for small cars, to rank third globally
in PV sales, and to have a PV subsector that makes a total contribution of 12% to national GDP by
2026. The government has adopted various initiatives targeting greater ease of doing business and
facilitation of R&D to help the sector achieve the targeted growth.
Statistics
Passenger
Cars 74.30%
Vans 5.20%
FY2012 FY2013 FY2014 FY2015 FY2016
Vans
Utility Vehicles
Passenger Cars
Total Passenger Vehicle Sales
368
345
58
56 319
52 53 52
48 47 48
44
42 237
182
36 30
12 14 13
FY2012 FY2013 FY2014 FY2015 FY2016 FY2012 FY2013 FY2014 FY2015 FY2016
07
COMMERCIAL
VEHICLES
Highlights
Overview
India is the world’s seventh-largest CV manufacturer and the subsector accounted for 3% of domestic
motor vehicle sales volume in FY2016. The domestic CV industry is split between LCVs and M&HCVs in
a ratio of 56:41, according to a 2016 report by D&B. CV production and domestic sales reported CAGRs
of 4.2% and 4.1% respectively between FY2012 and FY2016. Overall CV sales, i.e. including exports,
dropped by 3% over the same period. CV exports grew at a CAGR of 2.5% between FY2012 and FY2016,
with LCV exports claiming a 65% share in total CV exports in FY2016. Sri Lanka, Bangladesh, the UAE,
Nepal and South Africa were India’s top 5 CV export markets, claiming a combined share of 50% by
value, in FY2016. Sweden, Thailand and Finland were the top three import markets for the same year.
Outlook
The introduction of GST in India is expected to spur the domestic economy on both the supply and the
demand side, which is projected to result in strong commercial vehicle sales in the medium term at
least. On the other hand, lower incentives for exports to nearby markets such as Sri Lanka and
Bangladesh are likely to decrease export volumes, while efforts to curb steel imports from China are
expected to increase raw material prices. CV prices are also likely to increase, by about 10%, as a
result of BS-VI norm compliance. Government programmes aimed at boosting the length and quality
of India’s railway infrastructure are likely to snatch business from road carriers. Commercial vehicle
sales are expected to post a CAGR of 14% between FY2016 and FY2019, according to D&B estimates.
The HCV segment will grow at 16%, as against 12% for LCVs over the same period.
Statistics
200
LCV
100 Passenger
92 80 77 87 102 Carriers 7%
0 LCV Goods
FY2012 FY2013 FY2014 FY2015 FY2016 Carriers 49%
80 5
74 4
70 70 4
62 61 4
60 3
3 3
53
50 3
63 55 3
40 41
49 2 4 2
30 43 3 3
2
2
20 2
1
10 20 1
12 16
11 9 1 0
0 0 0
0 0
FY2012 FY2013 FY2014 FY2015 FY2016 FY2012 FY2013 FY2014 FY2015 FY2016
Passenger Carriers Goods Carriers Total Exports Passenger Carriers Goods Carriers Total Exports
08
TWO AND THREE
WHEELERS
Highlights
Overview
India boasts the second-largest two-wheeler market in the world in terms of volume of production,
and is the third-largest two-wheeler exporter, behind China and Japan. The country’s annual two-
wheeler production, at 18.8mn units in FY2016, is mostly consumed by the domestic market, with
exports totaling 2.48mn for the same year. India’s two-wheeler industry, broadly segmented into
entry-level, deluxe and premium, accounts for about 80% of the Indian motor vehicle industry in
terms of both volume and value. Motorcycles are typically the best-selling category, followed by
scooters and mopeds. Two-wheeler manufacturer Bajaj Auto, which exports about 40% of its annual
production, held a commanding 60% share in two-wheeler exports in FY2016.
Outlook
D&B expects annual two-wheeler sales to climb to more than 21mn units by FY2019, from some 19mn
units in FY2016. This forecast is corroborated by BMI Research, which also expects two-wheeler sales
to reach some 21mn units by 2019, and nearly 24mn by 2021, against projected outputs of some 30mn
units and 37mn units for 2019 and 2021, respectively. The outlook across motorcycle segments is
bright, with the lower-priced entry and executive segments more dependent for their growth on the
general macroeconomic situation and consumer sentiment, while the premium segment is more
affected by consumer income levels and changes in consumer preferences, according to D&B.
Improving infrastructure and changing lifestyles in urban India have resulted in a surge in the sales
of premium motorbikes, in a trend that is likely to deepen in the foreseeable future.
Source: D&B
Statistics
Two Wheeler
Two Wheeler
Production
Sales 79%
79%
Three
Wheeler Three
Production 4% Wheeler
Sales 4%
Passenger Vehicle Passenger
Commercial Vehicle Commercial Vehicle Vehicle Sales
Production 14%
Production 3% Sales 3% 14%
16,005 16,456
14,807 Bangladesh
13,409 13,797 7%
Sri Lanka
12%
1,975 1,956 2,084 2,458 2,481
Colombia
FY2012 FY2013 FY2014 FY2015 FY2016 Nigeria 12% 13%
Exports Domestic Sales Total Sales
Source: SIAM
09
AUTOMOTIVE
ANCILLARY
INDUSTRIES
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09 AUTOMOTIVE ANCILLARY INDUSTRIES CONTENTS
Highlights
Overview
India’s auto component sector is estimated to have had sales of INR 2,556bn in FY2016, having grown
at a CAGR of 5.7% between FY2012 and FY2016. The government’s Make in India initiative has been
helping consolidate the country as an auto component manufacturing hub. As a result, India’s auto
component imports rose only by 1.8% y/y in USD terms in FY2016, as against 6.1% in the previous year.
Nevertheless, India is still a net importer of auto components. Against this backdrop, up to 80% of the
auto components exported by India are supplied to OEM/Tier1 manufacturers, while the remaining
20% is exported to the after-market auto industry. Low or zero customs duties on imports from ASEAN
and the EU, in line with the FTAs India has signed, undermine domestic auto component
manufacturing by increasing the threat of advantageously-priced substitutes.
Outlook
The government-sponsored Make in India initiative is expected to make auto component
manufacturers stay or establish operations in India in spite of increasing labour costs. This, alongside
rising disposable incomes, and a bullish outlook on manufacturing and private consumption, will
result in the auto component industry growing at an average rate of 11.5% between FY2016 and
FY2019, to total turnover of some INR 3,560bn, according to an August 2016 report by D&B. India’s AMP
2026 projects that the turnover of the Indian automotive industry will grow to between INR 16,000bn
and INR 19,000bn by 2026. The auto component industry, in turn, is expected to grow from INR 2,556bn
in FY2016 to between INR 6,000bn and INR 7,320bn by 2026.
Statistics
Auto Component Industry Turnover, USDbn Auto Component Exports Auto Component Imports
UK 2.60%
Mexico 2.60%
France 1.60%
South Korea
Brazil 2.60% 11.20% Sweden 1.40%
France 3.00%
UAE 3.20% Others
Thailand 3.20% 16.00%
USA 23.60% Germany
Italy 3.90%
14.30%
UK 5.40%
Turkey China
Germany 7%
6.20% 23.20%
Tyres
Overview
India boasts one of the largest tyre markets in the world, with some 150mn tyres produced and some
124mn sold domestically in FY2016. The country was a net tyre exporter between FY2012 and FY2016.
Truck and bus tyres accounted for some 72% of exports by value in FY2016, followed by passenger car
tyres with 16%. Passenger car tyres and truck and bus tyres claimed almost equal shares of 46.1% and
47.6% of tyre imports by value in the same year. By volume, cycle tyres claimed 78% of total tyre
exports in FY 2016, while imports were mainly of passenger and two-wheeler tyres, with shares of 54%
and 28% respectively. China is India’s main source of tyre imports. The country’s biggest export
markets are the US, Germany and the Philippines, which claim shares of about 10%, 6%, and 5%,
respectively.
Outlook
India’s healthy recent rate of economic growth is expected to drive business sentiment which –
alongside government efforts to upgrade infrastructure, streamline agriculture and ensure steady raw
material supply to the steel, metal processing and construction industries, among others – is
projected to keep tyre demand robust in the medium-to-long term. Growing disposable incomes,
favourable consumer lending conditions and moderate inflation will help stimulate demand, including
demand for tyres and vehicles. The government’s Make in India initiative is expected to help
consolidate India as a tyre and vehicle spare part manufacturing hub, thus attracting fresh
investment in the tyre and auto component sectors.
Source: D&B
Tyre Statistics
133
OEMs 22%
108 106
100
96
Export 18%
36 34
27 27 27
Replacement
Tyres 60%
FY2012 FY2013 FY2014 FY2015 FY2016
Imports Exports