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Automobile: An automobile or motor car is a wheeled motor vehicle for transporting passengers; which also carries its own engine or motor.
History: •Introduced to India in the late 1890’s and the manufacturing industry only took off after independence in 1947. •The protectionist economic policies of the government gave rise in the 1950's to the Hindustan Motors Ambassador. •Hindustan Motors and a few smaller manufacturers such as Premier Automobiles, Tata Motors, Bajaj Auto, Ashok and Standard Motors held an oligopoly until India's initial economic opening in the 1980's. •The maverick Indian politician Sanjay Gandhi championed the need for a "people's car"; the project was realized after his death with the launch of a state-owned firm Maruti Udyog which quickly gained over 50% market share. •Tata Motors exported buses and trucks to niche markets in the developing world.
Overview of Automobile Industry
• The industry has grown at over CAGR of 14% p.a over the last 5 years. • In the year 2006-07, sales (domestic as well as exports) of the Indian automotive
industry crossed the historic landmark of 10 million units.
• With the potential to emerge as one of the largest in the world. Presently, India is • 2nd largest two wheeler market in the world • 13th largest commercial vehicle market in the world • 11th largest passenger car market in the world and is expected to be the 7th largest
market by 2016 .
• The industry has emerged as a key contributor to the Indian economy. • The Indian automotive industry is highly competitive with a number of global and
Indian companies present in the market.
Automotive sales for 2002-07
2007 2006 2005 2004 2003 2002 0 5 11.12
Sales in units (2006-07)
Share in Total Sales
9.71 8.53 7.29 6.25 5.41 10 15
517,648 4.7% 26.7%
Passenger Cars Three-Wheelers
Automotive clusters in India
Major automotive clusters - Mumbai-PuneNasik-Aurangabad (West), Chennai Bangalore-Hosur (South) and Delhi-GurgaonFaridabad (North)
Delhi-Gurgaon-NoidaGhaziabad Ludhiana Haridwar
North / Central
Ashok Leyland Force Motors Hindustan Motors Honda SIEL Kinetic Majestic Piaggio Swaraj Mazda Eicher Hero Honda Honda ICML LML Maruti Suzuki Yamaha Tata Motors
Ashok Leyland Enfield Ford Greaves Hindustan Motors Hyundai M&M Tata Toyota Kirloskar TVS Motors Volvo
Pitampur Jamshedpur Rajkot-Halol Kolkata
Mumbai-Pune-Nasik Aurangabad Hyderabad
Ashok Leyland Bajaj Auto DaimlerChrysler FIAT Force Motors GM Greaves Kinetic M&M Premier Skoda Tata Motors
Hindustan Motors Tata Motors
Chennai Bangalore Hosur
Source: SIAM, IMaCS analysis
Overview of Passenger Vehicles Market
• Indian Passenger vehicle Industry has grown with CAGR of 15.5% from FY’2001-02 to FY’2006-07. Significant increase in competition due to entry of global players. Shrinking of mini car segment, and increasing share of compact cars in Indian market. Impressive growth of executive segment(D), with CAGR of 112% from FY’ 2001-02 to FY’2006-07 Indian Passenger vehicle industry is undergoing significant market dispersion. Emergence of India as Global manufacturing base for mini and compact cars. Exports from passenger vehicle segment has grown significantly, with a CAGR of 30% from FY’2001-02 to FY’2006-07.
• • •
• • •
Domestic Passenger Vehicle Industry
Break-up of the Industry by Segment for 2007
1061.3 000 units
Passenger Cars, 78% SUVs/MUVs, 22%
Segment-wise Analysis of Passenger Vehicle Market
Segment Description Share in 2001-02 28% 54% 17% 0.2% 0.9% 0.0% Share in 2006-07 7% 70% 18% 3.8% 1.18% 0.02% CAGR
A B C D E F
Mini cars, up to 3400 mm length Compact cars, between 3401-4000 mm length Mid size cars between 4001-4500 mm length Executive cars between 4501 - 4700 mm length Premium cars between 4701 - 5000 mm length Luxury cars - above 5001 mm length
-11% 22% 18.6% 112% 31.1% NA
Segment A Market share of Key Players in 2006-07 Maruti Udyog Ltd. TATA Motors Ltd. Hyundai Motor India Ltd. Mahindra & Mahindra Ltd. Totyota Others 46% 16% 14% 7% 4% F 13% SUV D B C
Key Brands and Companies to which they Belong
Maruti 800. Alto, Wagon-R, Swift (MSuzuki), Indica (Tata) Santro, Getz (Hyundai ), Palio (Fiat India) Esteem, SX4 (MSuzuki) TATA Indigo, Verna, Elantra (Hyundai ), Honda City, Astra, Aveo, Optra (GM), Logan (M&M), Icon, Fiesta (Ford ), Cedia (HM), Petra (Fiat India) Civic (Honda), Opel Vectra (GM), Contessa (HM), Skoda Octavia, Mercedes C-class (Daimler Chrysler India) Sonata (Hyundai Motors),Honda Accord ,Corolla, Camry (Toyota Kirloskar), Mondeo, Superb (Skoda Auto), Mercedes E-class, 5 series (BMW India) Mercedes S-class, Maybach (DaimlerChrysler), BMW 7 Series Grand Vitara (MSuzuki),Safari (Tata), Tucsan (Hyundai Motors), CRV (Honda), Scorpio, C-fusion, Endeavour (Ford), Omni, Versa (MSuzuki), Sumo, Indigo Marina (Tata), Innova,Tavera, Bolero (M&M)
Indian Passenger Vehicle Market – Competitive Scenario
Passenger Cars Utility Vehicles Multi Purpose Vehicles
46% 2% 40%
16% 18% -
14% 1% -
7% 42% -
4% 21% -
4th largest Passenger Vehicle Market in World
Overview of Two-wheeler and CVs Market
• The total sales of the Indian two wheeler industry has grown at a CAGR of 14.5 per cent between FY’2001-02 and FY’2006-07. The motorcycles market had witnessed the fastest growth rate in the two wheeler segment, with a CAGR of 19.2%. Indian Two-wheeler market is characterized with intense competition with around 10 major players. Exports from two-wheeler industry has increased with a CAGR of 42.8%, from FY’200102 to FY’2006-07. The total sales of the Indian Commercial vehicles industry has grown at a CAGR of 26.1% between FY’2001-02 and FY’2006-07. With increased industrial production and investments in real estate CVs market has witnessed good growth. CV exports has grown from 12000 units in FY’2001-02 to 50,000 units in FY’200607, showing a CAGR of 33.2%. •
Segment-wise Analysis of Indian Two Wheeler Market
Segment A1 A2 A3 B2 B3 B4 C1 Description
Scooter with engine capacity less than 75 cc Scooter with engine Capacity ,75-125 cc Scooter with engine capacity between 125-250 cc Motorcycle with engine capacity between 75-125 cc Motorcycle with engine capacity between 125-250 cc Motorcycle with engine capacity above 250 cc Mopeds
Share in 2001-02 5% 5% 12% 62% 5% 1% 10%
Share in 2006-07 0% 10% 1% 66% 17% 1% 5%
CAGR -33.9% 32.9% -27.7% 14.9% 44.8% 5.7% -2.7%
Segment-wise Analysis of Indian CVs Market
Description (by Gross Vehicle Weight)
Share in 2001-02
Share in 2006-07
Up to 3.5 tonnes (Pickups) 5 - 7.5 tonnes (LCV)
7.5 – 12 tonnes (Intermediate CV) 12 – 16 tonnes( 4X2 FF/SF) 16 – 25 tonnes (Multi Axles) 25 tonnes and above (Tractor Trailers)
Market share of key players in 2006-07
Market Share of key Players in Twowheeler Industry Hero Honda Bajaj Motors TVS Motor co. HMSIL Others 42% 27% 19% 9% 3% of Key • Market ShareIndustryPlayerskey Market Share of in CVs Players in Two-wheeler TATA Motors 64% Industry Ashok Leyland M&M Ltd. Eicher Motors Ltd. Others 16% 10% 6% 4%
Indian 2-Wheeler Market Competitive Scenario
27% 15% -
19% 28% 82%
9% <1% 8% 10%
India is now the second largest two-wheeler market in the world
• • • • • • The Indian economy has grown at 8.5 per cent per annum. The manufacturing sector has grown at 8–10 per cent per annum in the last few years. More than 90 per cent of the CV purchase is on credit. Finance availability to CV buyers has grown in scope during the last few years. The increased enforcement of overloading restrictions has also contributed to an increase in the number of CVs plying on Indian roads. Several Indian firms have partnered with global players. While some have formed joint ventures with equity participation, others have entered into technology tie-ups. Establishment of India as a Manufacturing hub, for mini, compact cars, OEMs, and for auto components.
Key Market Drivers
Increasing disposable incomes Rising aspirational levels Low interest rates. Wide variety and easy availability of Financing options. High sensitivity to Fuel prices Lack of urban & rural public transportation infrastructure Flourishing Service Sector
Market evolution from Mini cars to Hatchbacks to Compact Sedans now evident
Increasing customer emphasis on aesthetics and comfort.
Shrinking product life-cycles
Indian Automotive Industry – Development and Growth
Pre 1983 • Closed market • Growth of market limited by supply • Outdated models 1983-1993 • Suzuki, Japan and GOI joint venture to form Maruti Udyog • Joint ventures with companies in commercial vehicles and components 1993-2007 • Delicencing of the sector in 1993 • Global major OEMs start assembly in India (GM, Ford, Honda, Hyundai, etc.) • Imports allowed from April 2001; alignment of duty on components and parts to ASEAN levels. • Easy auto finances. • Implementation of VAT. Players • Entry of Global players
Players • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mahindra
Players • Maruti Udyog • Hindustan Motors • Premier • Telco • Ashok Leyland • Mahindra & Mahindra
Current Political Environment
• • • • • • Indian government auto policy aimed at promoting an integrated, phased and conducive growth of the Indian automotive industry. Allowing automatic approval for foreign equity investment up to 100 per cent, with no minimum investment criteria. Establish an international hub for manufacturing small, affordable passenger cars as well as tractors and two wheelers. Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry. Assist development of vehicles propelled by alternate energy sources. Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activities. Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles. Promoting multi-modal transportation and the implementation of mass rapid transport systems.
• • • • • • • • • Growth in urbanization, 4th largest economy by PPP index. Upward migration of household income levels. Increase in PPP , led to the increase in market share of compact cars. 85% of Cars are financed in India (15% in China). Cars priced below USD 12000 account for nearly 80% of the market. Vehicles priced between USD 7000 –12000 form the largest segment in the passenger car market. Indian customers are highly discerning, educated and well informed. They are price sensitive and put a lot of emphasis on value for money. Preference for small and compact cars. They are socially acceptable, even amongst the well-off. Preference for fuel efficient cars with low running costs. The Tata Indica has the lowest running cost at US 8.5 cents per mile.
• With the entry of global companies into the indian market, advanced technologies ,both in product and production processes have developed. With the development or evolution of alternate fuels, hybrid cars have made entry into the market. Few global companies have setup their R&D centres in India. Major global players like audi, BMW,Hyundai etc have setup their manufacturing units in India. Government initiatives regarding tax rebates has led to global players setting up their R&D centres in India. Govt. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements.
New testing center for tractors & off-road vehicles, accident data analysis and specialised driving training at RAE BAREILLY Hill Area driving training center and Regional In-Use vehicle management center at SILCHAR
New testing & homologation center at MANESAR
Up-gradation of VRDE at AHMEDNAGAR
New complete proving ground at INDORE Up-gradation of ARAI at PUNE
New test & homologation center near CHENNAI
Automotive regulations in India
Status of Indian Regulation
Fully / Partially aligned In process of being aligned Items / Regulations to be covered Total
Number of regulations
43 32 39 114
Emission Standards Status
Cars Bharat Stage II
Already introduced in Metros:MiniMetros, from Sept, 2003
From April 1, 2005 Entire Country
Already introduced in Metros, MiniMetros .
Bharat Stage III
From April 1, 2005
From April 1, 2008
From April 1, 2005
Bharat Stage IV
From April 1, 2010
From April1, 2008
From April 1, 2010
Growth Forecasts as per Automotive Mission Plan
• The size of the Indian automotive industry is expected to grow at a rate of 13% per annum over the next decade to reach around 31.96 Mn in 2016 from 11Mn in 2007. The total investments required to support the estimated growth are around US$ 120-159 billion by 2016. Vehicle Type Two wheelers Passenger vehicles Three wheelers CV Total Number sold (in million units) 27.80 2.65 0.87 0.64 31.96
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