AUTO

INDUSTRY
ANALYSIS
 Automobile industry
 Tenth largest in the world with an annual production of
approximately 2 million units
 Expected to become one of the major global automotive industries in
the coming years

AUTOMOBILE

PASSENGER COMMERCIAL
2 WHEELER 3 WHEELER
VEHICLE VEHICLE
India is….
• Largest three wheeler market in the
world
• 2nd largest two wheeler market in
the world
• 4th largest passenger vehicle market
in Asia
• 4th largest tractor market in the
world
 Evolution of Early
Automobile
to mid 90s
Industry
Mid 90s – Early
itial Years •Seller’s market and 2000s
anufacturing was licensed long waiting periods
High Customs duty on import •Buyers market
teep excise duties & •Delicensing in 1993
ales tax •Increase in
Major players: •Removal of capacity Indigenization
emier Automobiles Ltd restrictions
Hindustan Motors •Easy Auto finance
•Decrease in
980s customs & excise •Manufactures
ntry of MUL, better product, diversifying into
th government support •Auto finance boom- related activities:
more players (foreign finance lease, fleet
eller’s Market banks & non banking management,
companies, better insurance and used
ong Waiting Periods schemes. car market
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
 Automotive industry crisis

• global financial crisis in the auto

industry that began during the latter
half of 2008
• weakened by the substantially more
expensive automobile fuels linked to
the 2003-2008 oil crisis
• the global financial crisis and the
related credit crunch placed pressure
on the prices of raw materials
• In 2009, the vehicle companies of the
world are being hit hard by the
economic slowdown across national
 BUDGET 2008-09
• consumption-driven growth
• policy on inclusive growth
• attempt to address farmer's woes
Pre-budget Demands of the
Automotive Industry
• The adoption of a uniform excise
structure of 16 percent across all
passenger cars and utility vehicles
• The reduction of excise duty on two-
wheelers and three-wheelers from 16
percent to 8 percent to offset declining
sales
• The provision of benefits for the
development of hybrid technology
• The offer of liberal credit to the
agricultural sector to encourage the
purchase of tractors
Budget Proposals Directly
Impacting the Indian
Automotive Industry
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
Volume Growth of Automobile Sector in Print
during 2008

Compared to 2007, Print advertising of

Automobiles dropped by 13% during 2008..
Share of categories of Automobile sector in
Print during 2008

 'Passenger Vehicles' were the front runners in Print

advertising with 64% share followed by ‘Motorcycle’ and
‘Commercial Vehicles’ with 17% and 7% share
respectively during 2008.
State-wise share of Automobile sector in
Print during 2008
 Tally of Automobile Advertisers in Print during 2008

• 4% rise in number of Automobile advertisers in Print during 2008 compared to 2007

 Usage of Sales Promotions ad campaigns in the
Automobile sector 

More than 55% of Automobile ads in Print were for Sales

Promotion during 2008.
 KEY ENABLERS KEY CHALLENGES

• Favorable Demographics •Cost Pressure

• Improving income curve •High Expectations
• Reducing interest rates •Inadequate Infrastructure Developme

Key Focus Areas

• Product development( includes collaboration, new products
developed)
• Vendor base (quality of vendors, skill levels , size etc.)
• Manufacturing capability( quality levels, productivity & skill levels,
technology )
• Service levels
• Supply chain
• Labor law
• Leverage IT

Key Features of Future Auto Policy

• Foreign Direct Investment
• Import tariff
• Incentives for Research and Development (R&D)
• Environmental Aspects
Thank You !