Indian Auto Industry

Facts
Second Largest two wheeler manufacturer in the world Largest tractor and three wheeler manufacturers in the world Fourth largest Commercial vehicle market in the world Eleventh largest passenger car market in the world

Trends
Growth of exports of 29.64 % FY 2010-11. Output of commercial vehicles has grown 32.63% compared to the 26.72% increase in passenger cars For every passenger car turned out, there are almost 6 two-wheelers produced

Growth Potential

Can become Worlds third largest automobile market in 2030.

By 2016, Automotive sector can DOUBLE its percentage contribution to GDP from current levels of 5% ($35.8 billion) to 10-11% ($160 billion).

Pre 1983
Closed market Growth of market limited by supply Outdated models Players Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1983-1993
Japanisation - GOISuzuki joint venture to form Maruti Udyog Joint ventures with companies in commercial vehicles and components Players Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & Mahindra

1993-2010
De licensing of sector in 1993 The excise duty rationalization Global major OEMs start assembly in India (Toyota, GM, Ford, Honda, Hyundai,VW,Nissan etc) Imports allowed from April 2001 Implementation of VAT .Higher Incentive for local R&D

Era of globalization and evolution of India as a global manufacturing hub

Major Indian Companies

Major Multi-national companies

Overall Market
Over all Production increased from 10.85 million vehicles in 2007-08 to 17.91million vehicles in 2010-11. Passenger vehicles increased from 2.35 million (2009-10) to 2.98 million Two-wheelers increased from 10.52 million to 13.37 million

Domestic Market
Vehicles sold including PV,CV 2W and 3W in 2010-11 was 17.91 million as compared to 14.05 million in 2009-10.

Exports
Sales increased from 1.8 mn units in 2009-10 to 2.39 million units in 2010-11 As per the Automotive Mission Plan (AMP) 2006-2016 total turnover of the automotive industry in India would be in the order of US$ 122 billion-159 billion in 2016

Dominated by Motorcycles 76% , Scooters 18% Mopeds 6%

Two Wheeler

Domestic - 11.79mn units . Hero Honda 43% & Bajaj 27% share Exports 1539590 units (10-11) . Bajaj Auto 59% TVS 17% share

CAGR 12%

Dominated by Cars 82% , MUV/SUV 18% Domestic 2.5mn units Maruti-38% Tata-13% Hyundai 13% CAGR -13.8%

Exports - 453479 units (10-11) Hyundai 51% Maruti 29%

Dominated by M&HCV Goods 46% Passenger 37% , Rest by LCV -17%

Commercial Vehicles

Domestic 676 thousand units , Tata-62% M&M -15% Exports 76 thousand units, Tata 64% M&M 16%

CAGR- 22%

Dominated by Passenger Carriers with 66% share , Goods Carrier -34%

Three Wheeler

Domestic 526 thousand units Export 269 thousand units

CAGR- 10.5%

CAGR -- Based on 2001-02 base

Automobile Domestic Sales Trends (No of vehicles) Category 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Passenger Vehicles 1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,951,333 2,520,421 Commercial Vehicles 318,430 351,041 467,765 490,494 384,194 532,721 676,408 Three Wheelers 307,862 359,920 403,910 364,781 349,727 440,392 526,022 Two Wheelers 6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,370,951 11,790,305 Grand Total 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,295,397 15,513,156

Category Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers Grand Total

Automobile Exports Trends (No of vehicles) 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 166,402 175,572 198,452 218,401 335,729 446,145 29,940 40,600 49,537 58,994 42,625 45,009 66,795 76,881 143,896 141,225 148,066 173,214 366,407 513,169 619,644 819,713 1,004,174 1,140,058 629,544 806,222 1,011,529 1,238,333 1,530,594 1,804,426

2010-11 453,479 76,297 269,967 1,539,590 2,339,333

Original Equipment Manufacturers (OEMs) Replacement Parts Production and Distribution : e.g. Air filters, oil filers and replacement lights Rubber Fabrication : tyres, hoses, belts etc. Auto component market size is US$ 26 in 2010-11 (CAGR 21% for the past 7 years) The exports of auto components industry has grown at a rate of nearly 30 per cent CAGR over the last four years.

Market Structure : Organized : 10% Unorganized : 90% Vendor Based 30% Direct Dealings 70% Certified used car dealers in India are Maruti True Value, Honda Auto Terrace, Ford Assured, Toyota U Trust, Hyundai Advantage, Mahindra and Mahindras First Choice, General Motors - Chevrolet-OK Unorganized market lacks services like -warranties, OEM equipments, insurance and taxes Second hand market expected to grow at 12-15 per cent in the next five years to touch a robust 2.5 million units and a turnover of Rs 50 thousand crores Estimations are that 50 percent of the used cars sales will be brought under organized car market by 2013

GDP Growth %
10 9 8 7 6 5 4 3 2 1 0 350 300 250

Foreign ExchangeReserves (US$ billion)

200
150
GDP Growth Reserves ($ billion)

100 50 0

Exchnage Rate Trend (INR to US $)

60
50 40 30 20 10 0
INR to USD

Reduction in Import tariff %

35
30 25 20

15
10 5 0
Import tariff %

1-5 year
Increased access to in credit Investment Infrastructure spending can Investment in the boost commercial vehicles infrastructure segment. spending can boost the commercial vehicle segment

5-10 years
Growing working population (441 million people in 2015/16) Upward migration of household income levels (600 million people have annual income of more than $10,200) Middle class expanding by 30 - 40 million every year

1 year
Impact of delayed monsoon (85% of normal, subsequent impact on paddy cultivation) on rural demand.

1-5 year
Non-availability of Key raw material (like Steel) at cheap price. Possible increase of interest rates (by 2-2.5% BPLR) because of planned government borrowing.

5-10 years
Non- availability of supplier base with demanded capability (Quality and Quantity). Poor execution of Infrastructure investments. (Construction of Highways of 16km per day against the target of 32 km per day) Increase in crude oil price

Can Stunt Growth

Rapid Urbanization of semi urban regions Rising aspirational levels. Improvement in living standards of middle class Increased spending on Fashion & lifestyle comforts. Seeking Value for money- consumer behavior Increasing customer emphasis on aesthetics and comfort.

Frugal Engineering is the way forward

Upgradeable green cars : Plug and play style engines to replace old ones Downsize the cars without losing out on interior space. Lower cost, low fuel consumption , less material usage and less pollution

Grants and Incentives for R&D work

100% grant for fundamental research, 75% for pre-competitive technology, 50%for product development Extension of 150% weighted deduction on R&D expenditure

Collaborations and Foreign Tie ups for research and technology transfer Developing engines for bio-fuels, electric or hybrid vehicles

Developing India as a Testing hub: National Automotive Testing and R&D Infrastructure Project
Setting up of comprehensive Testing and Validation facilities including Field Tracks for Agricultural Tractors, Trailers, Construction Equipments and various other off-road vehicles at Rae Bareilly in Northern India

India as a Testing Hub

India : A Developing Hub for Compact Cars

Compact cars account for 70% of the total car market. Compact car sales increasing at about 20% each year

Maruti Suzuki : plans to invest Rs3400 crores in Gujarat annum (total 250,000 cars/annum) 10 new Component JVs to support new Diesel Engine Plant.
Hyundai :
Plans investment of Rs1500 crores in India

Tata Motors :
Plans to invest Rs 9000 crores in next three years

Toyota : Toyota Kirloskar motors investing Rs 900 crores in India. Ford : plans to invest 1 billion US $ (240000 cars/annum) VW : Investing Rs 2400 crores in India.

UK India

Nissan :

Four models in India, involving a total investment of over Rs 2,000 crore.

India will be a Automotive hub, led by small cars and auto component domains Export of automotive components to ASEAN,BRIC,EU and USA for OEMs as well as Aftermarket Booming Automobiles (Particularly cars) second sales and remodeling Increased deployment of IT-enabled Automobile support systems like GPS,ABS,ASR and Safety systems . Quality Certification (Deming, Six Sigma,TQM,TS16949) amongst suppliers have attained critical mass and the entire market will follow to get quality certifications.

Will be a hub for optimal cost, high quality vehicular testing and terrain data acquisition services
Alternate fuel (Bio fuel, electricity) and environment friendly green engines (Bharat emission norms)

Projection of 5 million cars by 2015 and more than 9 million by 2020 (SIAM). By 2050 the country is expected to be top the world in car volumes with approximately 611 million vehicles on the nations roads. Hybrid cars Vehicles based on Bio fuels . Vehicles based on Alternative energy sources