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

2 WHEELER

3 WHEELER

PASSENGER
VEHICLE

COMMERCIAL
VEHICLE

Trends in Automobile sector

Continue.
Automobile Production Trends

Category

2002-03

2003-04

(Number of
Vehicles)

2004-05

2005-06

2006-07

2007-08

Passenger
Vehicles

723,330

989,560

1,209,876

1,309,300

1,545,223

1,762,131

Commercial
Vehicles

203,697

275,040

353,703

391,083

519,982

545,176

Three
Wheelers

276,719

356,223

374,445

434,423

556,126

500,592

Two
Wheelers

5,076,221

5,622,741

6,529,829

7,608,697

8,466,666

8,026,049

Grand Total

6,279,967

7,243,564

8,467,853

9,743,503 11,087,997 10,833,948

Automobile Domestic Sales Trends

(Number
of Vehicles)

Category

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Passenger
Vehicles

707,198

902,096

1,061,572

1,143,076

1,379,979

1,547,985

Commercial 190,682
Vehicles

260,114

318,430

351,041

467,765

486,817

Three
Wheelers

231,529

284,078

307,862

359,920

403,910

364,703

Two
Wheelers

4,812,126

5,364,249

6,209,765

7,052,391

7,872,334

7,248,589

Grand Total 5,941,535

6,810,537

7,897,629

8,906,428

10,123,988

9,648,094

Category

Automobile Exports Trends

2002-03

2003-04

2004-05

(Number of
Vehicles)

2005-06

2006-07

2007-08

Passenger
Vehicles

72,005

129,291

166,402

175,572

198,452

218,418

Commercial
Vehicles

12,255

17,432

29,940

40,600

49,537

58,999

Three
Wheelers

43,366

68,144

66,795

76,881

143,896

141,235

Two
Wheelers

179,682

265,052

366,407

513,169

619,644

819,847

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 Nov08, 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 Nov08.

Two wheeler Industry performance

volumes declined by 14.7% to 567k units as compared to
665k units in Nov07

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 !