Presentation on Landscape of Automobile Industry in India

Consulting Club

Evolution of Automobile Industry

Initial Years Manufacturing was licensed Early to mid 90s Sellers market and long waiting periods Delicensing in 1993 Removal of capacity restrictions Decrease in customs & excise

High Customs duty on import

Steep excise duties & sales tax

Mid 90s Early 2000s

Buyers market Increase in Indigenization Easy Auto finance Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market

2 Major players: Premier Automobiles Ltd & Hindustan Motors

1980s

Auto finance boom- more Entry of MUL, better product, players (foreign banks & with government support non banking companies, better schemes. Sellers Market Long Waiting Periods

AUTOMOBILE

2 WHEELER

3 WHEELER

PASSENGER VEHICLE

COMMERCIAL VEHICLE

I.C.V.

M.C.V.

H.C.V.

MOTORCYCLE

SCOOTERS

SCOOTERETTES

MOPEDS

Trends in the automobile sector

Production of automobiles
10
Domestic Sales of automobiles

CAGR 15.4%
8.5 6.3 4.8 5.3
million numbers

CAGR 14.2%
10 8 6 4 2 0 2000-01 2001-02 2002-03 2003-04 2004-05 4.6 5.2 5.9 6.8 7.9

million numbers

8 6 4 2 0

7.2

2000-01 2001-02 2002-03 2003-04 2004-05

Exports of automobiles

Domestic Sales have been growing strongly

million numbers

Exports have nearly tripled in the last 5 years Largest three wheeler market in the world 4th largest passenger vehicle in Asia 4th largest tractor in the market 5th largest commercial vehicle market in the world

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

CAGR 39%
0.48 0.31 0.17 0.18

0.63

2000-01 2001-02 2002-03 2003-04 2004-05

Segment wise market share

Three Wheeler
3.9% 4.03%

CVs
Growth Rates of different segments
13.44%

Passenger vehicles

4 year CAGR

25 20 15 10 5 0

23.5

14.3 11.3

14

14.2

Two Wheeler
78.63%

Commercial Vehicles

Passenger Vehicles

Two wheelers

Three wheelers

total Automobiles

Segments

The industry has not experienced much change in its structure over the last 6 years Two- wheelers form the major share of domestic sales Passenger vehicles lead the exports market(57.4%) 2 wheelers form the bulk of exports as well, but are losing share to Passenger vehicles The growth in the two wheeler market is driven by the motorcycle market and is expected to grow at 14-15 % YOY

The Key Players

Others, 5.8% Yamaha, 3.8% TVS Motors, 17.7% Hero Honda, 39.8% Bajaj Auto, 24.4%
Hyundai, 19.17 Others, 5.73

Honda Motors, 8.5%

Honda, 5.33 Tata Motors, 17.19 Maruti, 50.37

Two wheeler

Passenger vehicle

Commercial vehicles Passenger vehicle Two Wheeler Three Wheeler

TATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors Bajaj Auto, Piaggio India

KEY ENABLERS
Favorable Demographics Improving income curve Reducing interest rates

KEY CHALLENGES
Cost Pressure High Expectations Inadequate Infrastructure Development

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 Other measures

THANK YOU