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Analysis of Macro-environmental factors

for Automobile Industry


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.
AUTOMOBILE

COMMERCIAL
2 WHEELER 3 WHEELER PASSENGER VEHICLE
VEHICLE

L.C.V. I.C.V. H.C.V.

MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS


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
Sales in Share CAGR
Sales(Million units) units in (2002-
(2006-07) Total 07)
2007 11.12 Sales
Two Wheelers 8,476,686 76.2% 14.5%
2006 9.71
Passenger Cars 1,578,176 14.2% 16.7%
2005 8.53

2004 7.29 Three-Wheelers 547,805 4.9% 20.5%

2003 6.25
Commercial 517,648 4.7% 26.7%
2002 5.41 Vehicles

0 5 10 15
Automotive clusters in India
Major automotive clusters - Mumbai-Pune-
Nasik-Aurangabad (West), Chennai -
Bangalore-Hosur (South) and Delhi-Gurgaon-
Faridabad (North)
Delhi-Gurgaon-Noida- North / Central South
Ghaziabad Ashok Leyland Enfield
Ludhiana Ashok Leyland Eicher
Haridwar Ford Greaves
Force Motors Hero Honda
Hindustan Motors Hyundai
Hindustan Motors Honda
M&M Tata
Honda SIEL ICML
Pitampur Toyota Kirloskar TVS Motors
Kinetic LML
Volvo
Majestic Maruti Suzuki
Jamshedpur
Piaggio Yamaha
Rajkot-Halol Swaraj Mazda Tata Motors
Kolkata

East West
Ashok Leyland Bajaj Auto
Mumbai-Pune-Nasik Hindustan Motors DaimlerChrysler
Aurangabad Hyderabad FIAT Force Motors
Tata Motors
GM Greaves Kinetic
M&M Premier
Skoda 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
Sales Break-up of the Industry by
Segment for 2007
2007 1379.1

2006 1143.1 Passenger


Cars, 78%
22%
2005 1061.3 SUVs/MUVs, 22%
000 units
2004 902.1

2003 707.2 78%

2002 675.1

0 500 1000 1500


Segment-wise Analysis of Passenger Vehicle
Market
Segment Description Share Share CAGR
in in
2001-02 2006-07
A Mini cars, up to 3400 mm length 28% 7% -11%

B Compact cars, between 54% 70% 22%


3401-4000 mm length

C Mid size cars between 4001-4500 17% 18% 18.6%


mm length

D Executive cars between 0.2% 3.8% 112%


4501 - 4700 mm length

E Premium cars between 0.9% 1.18% 31.1%


4701 - 5000 mm length

F Luxury cars - above 5001 mm 0.0% 0.02% NA


length
Segment Key Brands and Companies to which
they Belong
A Maruti 800.
Market share of Key Players in B Alto, Wagon-R, Swift (MSuzuki), Indica (Tata)
2006-07 Santro, Getz (Hyundai ), Palio (Fiat India)

Maruti Udyog Ltd. 46% C Esteem, SX4 (MSuzuki) TATA Indigo,


Verna, Elantra (Hyundai ), Honda City, Astra,
Aveo, Optra (GM), Logan
TATA Motors Ltd. 16% (M&M), Icon, Fiesta (Ford ), Cedia (HM), Petra
(Fiat India)
D Civic (Honda), Opel Vectra (GM), Contessa
Hyundai Motor India 14% (HM), Skoda Octavia,
Ltd. Mercedes C-class (Daimler Chrysler India)
E Sonata (Hyundai Motors),Honda Accord ,Corolla,
Mahindra & 7% Camry (Toyota Kirloskar), Mondeo, Superb
Mahindra Ltd. (Skoda Auto), Mercedes E-class, 5 series (BMW
India)
Totyota 4%
F Mercedes S-class, Maybach (DaimlerChrysler),
BMW 7 Series
Others 13% SUV Grand Vitara (MSuzuki),Safari (Tata),
Tucsan (Hyundai Motors), CRV (Honda),
Scorpio, C-fusion, Endeavour (Ford),

MUV Omni, Versa (MSuzuki), Sumo, Indigo Marina


(Tata), Innova,Tavera, Bolero (M&M)
Indian Passenger Vehicle Market – Competitive Scenario

Passenger
Cars 46% 16% 14% 7% 4% - - - - - - - -

Utility
Vehicles 2% 18% 1% 42% 21% 1% 10% 1% <1% - 4% - %
Multi
Purpose 40% - - - - - - - - - - - -
Vehicles

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’2001-
02 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’2006-
07, showing a CAGR of 33.2%.
Segment-wise Analysis of Indian Two Wheeler
Market
Segment Description Share in 2001-02 Share in 2006-07 CAGR

A1 Scooter with engine 5% 0% -33.9%


capacity less than 75 cc

A2 Scooter with engine 5% 10% 32.9%


Capacity ,75-125 cc

A3 Scooter with engine 12% 1% -27.7%


capacity between
125-250 cc

B2 Motorcycle with engine 62% 66% 14.9%


capacity between
75-125 cc

B3 Motorcycle with engine 5% 17% 44.8%


capacity between
125-250 cc

B4 Motorcycle with engine 1% 1% 5.7%


capacity above 250 cc

C1 Mopeds 10% 5% -2.7%


Segment-wise Analysis of Indian CVs Market

Description (by Gross Share in 2001-02 Share in 2006-07 CAGR


Vehicle Weight)

Up to 3.5 tonnes 15% 36% 51.9%


(Pickups)

5 - 7.5 tonnes (LCV) 25% 9% 5.1%

7.5 – 12 tonnes 7% 9% 33.4%


(Intermediate CV)

12 – 16 tonnes( 4X2 29% 17% 14.6%


FF/SF)

16 – 25 tonnes 8% 21% 55.9%


(Multi Axles)

25 tonnes and above 8% 21% 9.7%


(Tractor Trailers)
Market share of key players in 2006-07
Market Share of key Players in Two- • Market Share of Key Players in CVs
wheeler Industry
Market Share of key
Industry
Hero Honda 42% Players in Two-wheeler
TATA Motors 64%
Industry
Bajaj Motors 27% Ashok Leyland 16%

TVS Motor co. 19% M&M Ltd. 10%

HMSIL 9% Eicher Motors Ltd. 6%

Others 3% Others 4%
Indian 2-Wheeler Market
Competitive Scenario

Motorcycle 42% 27% 19% - - - - - -

- 15% 28% - 2% 46% 9% <1% -

- - 82% - - - 8% 10% -

India is now the second largest


two-wheeler market in the
world
Economic Environment

• 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 Key Trends
 Increasing disposable incomes
 Market evolution from Mini cars
 Rising aspirational levels to Hatchbacks to Compact Sedans

 Low interest rates. now evident


Wide variety and easy
availability of Financing
options.
 Increasing customer emphasis on
 High sensitivity to Fuel prices
aesthetics and comfort.
 Lack of urban & rural public
transportation infrastructure
 Shrinking product life-cycles
 Flourishing Service Sector
Indian Automotive Industry – Development and
Growth
Pre 1983 1983-1993 1993-2007

• Closed market • Suzuki, Japan and GOI joint • Delicencing of the sector in 1993
• Growth of market venture to form • Global major OEMs start
limited by supply Maruti Udyog assembly in India
• Outdated models • Joint ventures with (GM, Ford, Honda, Hyundai, etc.)
companies in commercial • Imports allowed from April 2001;
vehicles and components alignment of duty on components
and parts to ASEAN levels.
• Easy auto finances.
• Implementation of VAT.
Players Players Players
• Hindustan Motors • Maruti Udyog • Entry of Global players
• Premier • Hindustan Motors
• Telco • Premier
• Ashok Leyland • Telco
• Mahindra & Mahindra • 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.
Social Environment
• 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.
Technological Environment
• 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.
NATRIP Network
New testing center for
tractors & off-road
vehicles, accident data
analysis and specialised
driving training at RAE Hill Area driving
BAREILLY training center and
Regional In-Use
vehicle
management center
New testing & at SILCHAR
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
Environmental Scenario

Automotive regulations in India

Number of
Status of Indian Regulation regulations

Fully / Partially aligned 43

In process of being aligned 32

Items / Regulations to be covered 39

Total 114
Emission Compliance
Emission Standards Status
Cars Two Wheelers C Vs

Bharat Stage II Already introduced From April 1, 2005 Already introduced


in Metros:Mini- Entire Country in Metros, Mini-
Metros, from Sept, Metros .
2003

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 Number sold (in million units)


Two wheelers 27.80

Passenger vehicles 2.65

Three wheelers 0.87

CV 0.64
Total 31.96
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