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Automotives: August
Automotives: August
AUGUST
2012
Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends
Growth drivers
Success stories: Maruti, Tata Motors Opportunities
Useful information
Automotives
Advantage India
AUGUST
2012
Growing demand
Innovation opportunities
FY16E
Market size: USD145 billion
Strong demand growth due to rising incomes, growing middle class, and a young population is likely to propel India among the worlds top five auto-producers by 2015 Growth in export demand is also set to accelerate
Tata Nano and the upcoming Pixel have opened up the potentially large ultra low cost car segment Innovation is likely to intensify among engine technology and alternative fuels
Advantage India
Rising investments
Policy support
India has significant cost advantages; auto firms save 10-25 per cent on operations in India compared to Europe and Latin America A large pool of skilled manpower and a growing technology base will induce greater investments
The government aims to develop India as a global manufacturing as well as R&D hub There has been a wide array of policy support in the form of sops, taxes and FDI encouragement
FY10
Market size: USD57.7 billion
Notes: R&D Research and development, FDI Foreign direct investment; FY Indian financial year (April March); FY16E estimated figure for financial year 2016; estimates are from the governments Automotive Mission Plan (2006 2016)
ADVANTAGE INDIA
Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends Growth drivers Success stories: Maruti, Tata Motors Opportunities Useful information
Automotives
AUGUST
2012
Automotives
AUGUST
2012
Two-wheelers
Passenger vehicles
Commercial vehicles
Three-wheelers
Mopeds
Passenger cars
Passenger carriers
Scooters
Utility vehicles
Motorcycles
Multi-purpose vehicles
Goods carriers
Electric twowheelers
Automotives
AUGUST
2012
Gross turnover of automobile manufacturers in India expanded at a CAGR of 17.7per cent over FY07-1 1 Excluding three wheelers, cars account for the largest share of revenues (66.2 percent in 2010)
Revenue trends over the past few years in USD million
70.0 60.0 50.0 40.0 30.5 30.0 20.0 10.0 0.0 FY07 FY08 FY09 FY10 FY11 66.2% 36.6 33.3 21.5% Trucks Cars 58.6 CAGR: 17.7% 43.3
12.3%
Two Wheelers
Automotives
AUGUST
2012
12.0 7.6 8 8.4 10.0 8.0 6.0 1.3 0.4 0.4 1.2 0.4 0.4 1.6 0.6 0.5 1.3 0.5 0.6 1.8 2.4 4.0 6.5 8.5
10.5
Passenger vehicles was the fastest growing segment during that period with a CAGR of 14.5 per cent
14.0
13.4
0.8 0.8
3.0
2.0
0.0
FY05
FY06
FY07
FY08
FY09
0.4 0.5
FY10
0.6 0.6
FY11
FY12
0.8 0.8
3.1
15.5
18.0
Automotives
AUGUST
2012
Two wheelers dominate production volumes; in FY12, the segment accounted for more than three quarters of total automotives production in the country
In fact, India is the worlds second largest two wheeler producer; the country is also the fourth largest commercial vehicle producer
4% 4% 16% Two Wheelers Passenger Vehicle Commercial Vehicle Three Wheelers 76%
Automotives
AUGUST
2012
11.5%
Passenger cars
8.1% 36.0% MCV & HCV Passenger Carriers MCV & HCV Goods Carriers LCV Passenger Carriers 49.7% 6.1% LCV Goods Carriers
Source: SIAM, Aranca Research Notes: LCV Light commercial vehicle; MCV Medium commercial vehicle; HCV Heavy commercial vehicle
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Automotives
AUGUST
2012
15.6%
5.3% Mopeds
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Automotives
AUGUST
2012
Automobiles export volumes increased at a CAGR of 22.4 per cent over FY05FY12 Over this period, the fastest growth was in the two wheeler segment (25.8 per cent) followed by three wheelers (21.9 per cent)
0.04 0.2
0.04 0.2
0.08 0.3
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
Passenger Vehicle
Commercial Vehicle
Three Wheelers
Two Wheelers
0.1
0.4
12
Automotives
AUGUST
2012
Two wheelers accounted for the largest share in exports (by volume) at 67 per cent in FY12 Passenger vehicles account for a sizeable 18 per cent of overall exports
18% Passenger Vehicle 3% 12% 67% Commercial Vehicle Three Wheelers Two Wheelers
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Automotives
AUGUST
2012
The automotives industry is concentrated with market leaders in each segment commanding a share of over 40 per cent
Market Leader Passenger Vehicles MCVs & HCVs LCVs Three Wheelers
45% 16%
Others
15% 7%
63%
23%
7%
59%
30%
4%
4%
41%
40%
10%
Motorcycles
Scooters
59%
24%
7%
6%
51%
21%
14%
Source: SIAM, Aranca Research
Notes: Data is for FY10
10%
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Automotives
AUGUST
2012
launches
Increasing R&D investments from both the government and the private sector Private sector innovation has been a key determinant of growth in the sector;
two good examples are Tata Nano and Tata Pixel while the former has been a success in India, the latter is intended for foreign markets
In FY11, the CNG market was worth more than USD330 million and CNG cars
Alternative fuels
and taxis are expected to register a CAGR of 28 per cent over FY11-FY14
The CNG distribution network in India is expected to increase to 250 cities by
15
Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends
Growth drivers
Success stories: Maruti, Tata Motors Opportunities
Useful information
16
Automotives
AUGUST
2012
Sector has been benefitting from strong demand and product innovation
Increasing investments
Resulting in
Rising investments from domestic and foreign players Greater innovation in products; market segmentation
GROWTH DRIVERS
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Automotives
AUGUST
2012
Rising incomes and a growing middle class driving domestic demand growth
Rising incomes; growing middle class
Personal (nominal) disposable income is expected to rise annually at 8.5 per cent over FY11-15 Rising middle class size of the middle class expected to touch 550 million by 2025 from 50 million in 2010 Favourable demographics a young population is also driving up the demand for cars Demand for commercial vehicles have got a boost due to development of roadways and greater market access
60
50 40 30 20 10 0 2005 Strivers 2010 Seekers 2015 Deprived
2020 Aspirers
2025 Globals
GROWTH DRIVERS
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Automotives
AUGUST
2012
Easier access to credit has also been a key determinant of growth in automotives
Easy availability of credit
25.0
Greater access to credit makes purchases of both passenger and commercial vehicles easier The auto finance industry has grown at an average annual rate of 13 per cent during FY08-12 The private sector banks like ICICI, HDFC are also showing increasing interest in the segment which was previously dominated by public players
Notes: Greater distributional efficiencies, increasing demand (especially from rural areas) due to rising disposable incomes have created new markets for products within the country
GROWTH DRIVERS
19
Automotives
AUGUST
2012
Manufacturing skills
Manpower costs
Supplier base
Raw materials
East Asia
Latin America
Brazil Mexico
In competition with India
20
Automotives
AUGUST
2012
investment criteria
Encourages R&D by offering rebates on the R&D expenditure spent by the
companies
Setting up of a technology modernisation fund focussed on SMEs Automotives training institutes, auto design centres, special auto parks also
established
Set up at total cost of USD388.5 million to enable the industry to implement global
NATRiPs
standards
R&D centres of excellence with focus on low-cost manufacturing and product
development solutions
Worked towards reduction of excise duty on small cars and the increase of
Increased custom duty on cars and MUVs valued above USD40,000 to 75 per cent
from 60 percent
Notes: SME Small and Medium Enterprises, R&D- Research and Development NATRiP National Automotive Testing and R&D Infrastructure Project
GROWTH DRIVERS
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Automotives
AUGUST
2012
Research, design, development and testing of vehicles Centre of excellence for photometry, electromagnetic compatibility (EMC) and test tracks Complete testing facilities for all vehicle categories Centre of excellence for vehicle dynamics and tyre development Services for all vehicle categories Centre of excellence for power-train development and material Complete homologation services for all vehicle categories Centre of excellence for infotronics, EMC and passive safety Services to agri-tractors, off-road vehicles and a driver training centre Centre of excellence for accident data analysis Services to all vehicle categories Centre of excellence for component development, noise vibration and harshness (NVH) testing Research, design, development and testing of vehicles Centre of excellence for photometry, EMC and test tracks
Rae Bareilly Centre International Centre for Automotive Technology (iCAT), Manesar
GROWTH DRIVERS
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Automotives
AUGUST
2012
North
DelhiGurgaon Faridabad
West
MumbaiPune Nashik Aurangabad Kolkata Jamshedpur
East
South
RenaultNissan
GROWTH DRIVERS
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Automotives
AUGUST
2012
WEST: Maharashtra, and Gujarat are bases for heavy and light vehicle manufacturing
Heavy Vehicle Manufacturing Plant Light Vehicle Manufacturing Plant SOUTH: Chennai hosts manufacturing plans for heavy and light vehicles
GROWTH DRIVERS
24
Automotives
AUGUST
2012
Accumulated FDI inflows into the automotives sector over Apr 2000 Feb 2012 was USD6.6 billion (4.1 per cent of total FDI); inflows (USD3.3 billion) in the last three fiscal (FY10-12) accounted for 50 per cent of the above total Top 5 origin countries for FDI (2000-2010) Country
DelhiGurgaon Faridabad
Ahmedabad
Sweden
Kolkata Jamshedpur
369
GROWTH DRIVERS
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Automotives
AUGUST
2012
Global car majors have been ramping up investments in India in order to meet growing domestic demand. They also have plans to leverage Indias competitive advantage to set up export-oriented production hubs
Its Chennai plant has nearly doubled production to 250,000 cars The company has completed 80 per cent investment at Oragadam, a car plant near Chennai Launched an automatic transmission variant in its petrol model of the sedan Fiesta
80
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Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends Growth drivers Success stories: Maruti, Tata Motors Opportunities Useful information
27
Automotives
AUGUST
2012
Continuing market leadership Product portfolio expansion Increased productivity Enhanced R&D capability Capacity expansion Roll out of peoples car (Maruti 800) 1983 1994 Production of 1 millionth car Product portfolio comprising 16 passenger vehicle models In the process of establishing Suzukis largest R&D facility outside Japan 55 per cent market share in the Indian car market
Expansion plans to produce 1.7 million cars by 2013 2012 Exports reached 1 million units in April 2012
1994
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2012
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Automotives
AUGUST
2012
Tata Nano launched Production of 1st indigenously designed LCV Acquired stake in Hipo Carrocera SA Launched Indica India's first fully indigenous passenger car
Disruptive Innovation
JV with Daimler AG
Market expansion Product portfolio expansion Enhancing R&D capability Acquisitions Tata Engineering & Locomotives established Launch of companys 1st indigenous CV
Joint Ventures
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Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends Growth drivers Success stories: Maruti, Tata Motors Opportunities Useful information
30
Automotives
Opportunities
AUGUST
2012
Toyota have announced plans to make India their hub for new global small car platforms
Light vehicle sales in India
and M&M jointly plan to develop a technology for two-wheelers to run on natural gas
Electric cars are likely to
ultra low cost cars segment (to developing and emerging markets)
OPPORTUNITIES
31
Automotives
AUGUST
2012
Contents
Advantage India Market overview and trends Growth drivers Success stories: Maruti, Tata Motors Opportunities Useful information
32
Automotives
Industry Associations
AUGUST
2012
Society of Indian Automobile Manufacturers (SIAM) Core 4-B, 5th Floor, India Habitat Centre Lodhi Road, New Delhi 1 003 10 India Phone: 91 1 246478102 1 Fax: 91 1 24648222 1 E-mail: siam@siam.in
USEFUL INFORMATION
33
Automotives
Glossary
AUGUST
2012
CAGR: Compound Annual Growth Rate CV: Commercial Vehicle FDI: Foreign Direct Investment FY: Indian financial year (April to March)
GOI: Government of India HCV: Heavy Commercial Vehicle INR: Indian Rupee LCV: Light Commercial Vehicle OEM: Original Equipment Manufacturers PV: Passenger Vehicle SIAM: Society of Indian Automobile Manufacturers ULCC: Ultra Low Cost Car USD: US Dollar
Wherever applicable, numbers have been rounded off to the nearest whole number
USEFUL INFORMATION
34
Automotives
Disclaimer
AUGUST
2012
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this
presentation to ensure that the information is accurate to the best of Aranca and IBEFs knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
DISCLAIMER
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