AUTO

INDUSTRY SNAPSHOT 2016

IIMB Investment Fund
Agenda
Industry Overview
Passenger Vehicles Segment
Two Wheeler Segment
Commercial Vehicles Segment
Different segments in the Indian automobile industry
Automobile
Industry

Passenger Two Commercial Three

Vehicles Wheelers Vehicles Wheelers

Medium & Passenger

Cars Scooters
Heavy CVs Carriers

Utility Goods
Motorcycles Light CVs
Vehicles Carriers

Vans Mopeds

IIMB Investment Fund Auto Sector Report

Two wheelers account for 80% of the market (by volume)

Domestic Market Share for 2015-16

Passenger Commercial Vehicles

Vehicles 3%
14%
Three Wheelers
3%

Two Wheelers
80%

Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers

Source: SIAM

IIMB Investment Fund Auto Sector Report

Two wheelers also grew the fastest over the past 5 years followed by passenger vehicles
Domestic Sales Volumes from FY14 to FY16 (in Lakhs) 5 Year CAGR
205
Grand Total 197 5.7%
184

165
Two Wheelers 160 6.9%
148

5
Three Wheelers 5 0.5%
5

7
Commercial Vehicles 6 .02%
6

28
Passenger Vehicles 26 2.2%
25
2015-16 2014-15 2013-14
Source: SIAM - 50 100 150 200

IIMB Investment Fund Auto Sector Report

Consistent growth in exports led by two wheelers
Export Volumes from FY14 to FY16 (in Lakhs) 5 Year CAGR
36
Grand Total 36 9.4%
31

25
Two Wheelers 25 10.1%
21

4
Three Wheelers 4 8.4%
4

1
Commercial Vehicles 1 6.6%
1

7
Passenger Vehicles 6 8%
6
2015-16 2014-15 2013-14
Source: SIAM - 5 10 15 20 25 30 35 40

IIMB Investment Fund Auto Sector Report

Agenda
Industry Overview
Passenger Vehicles Segment
Two Wheeler Segment
Commercial Vehicles Segment
Maruti Suzuki leads India car sales with 46% market share

Passenger Vehicle Sales Share, 2015

Tata Motors, 6%
Toyota,
5%

Honda, 7%

Mahindra &
Mahindra, 8% Maruti Suzuki, 46%

Hyundai, 17%

Source: SIAM

IIMB Investment Fund Auto Sector Report

Mini cars losing market to premium cars as wealth speeds up
Indian drivers appetites for larger, costlier vehicles is surging with the country's wealth
Minis accounted for only 19% of total unit sales in 2015, down from 24% in 2013
The percentage of Indian households with annual disposable incomes greater than
$15,000 may rise to 15.3% in 2020 from 8.1% last year (Euromonitor)
India Passenger-Auto Sales by Segment
Vans, 8% 2013 2015

Vans, 6%
Mini Cars,
Mini Cars,
SUV/MPV, 19%
SUV/MPV, 24%
21% 21%

Compact/Pre Compact/Pre
mium, 47% mium, 54%

Source: Bloomberg, Euromonitor

IIMB Investment Fund Auto Sector Report

India's tighter emissions rules may add to car costs
The nation is implementing Bharat Stage IV standards, equivalent to the Euro IV
India's government plans to skip Bharat Stage V and implement the tighter Bharat VI
standard nationwide by 2020
Stage Euro Standard Equivalence Date Region
Bharat Stage II Euro II 2005 Nationwide
Bharat Stage III Euro III 2010 Nationwide
Apr10 13 Cities in NCR
Jul15 29 Cities in 4 States
Bharat Stage IV Euro IV Oct15 9 States
Apr16 10 States and UTs
Apr17 Nationwide

Source: Ministry of Road Transport & Highways

IIMB Investment Fund Auto Sector Report

Automotive mission plan 2016-26 to boost economic development
Key objectives of the plan:
Propel the Indian automotive industry to be the engine of the Make in India
programme
Make the automotive industry a significant contributor to the Skill India programme
by creating jobs that will boost skilled labour
Enhance mobility in the public transportation segment, balancing against the growth
of personal transport
Increase net exports of the Indian automotive industry several fold, potentially 35-40%
of its overall output in the next 10 years
Comprehensive and stable policy for the automotive sector

Source: SIAM

IIMB Investment Fund Auto Sector Report

V-VFM scheme can boost growth by 4-8%
The Ministry of Road Transport and Highways has proposed a Voluntary Vehicle Fleet
Modernization (V-VFM) scheme aimed at reducing pollution levels in the country
The scheme is applicable on vehicles (all segments) bought on or before 31st March
2005
This scheme, if implemented, could provide a temporary boost to growth (4-8%)
Benefits of the scheme to the vehicle owner:
The owner will receive credit for the scrap value of the old car at the time of the new
purchase
The buyer will receive a benefit of up to 50% reduction in excise duty on the new
vehicle purchased. This will be the key trigger for people to opt for the scheme
The OEMs may give some additional discount to encourage people to opt for the V-
VFM scheme
Source: Media; IIFL

IIMB Investment Fund Auto Sector Report

Agenda
Industry Overview
Passenger Vehicles Segment
Two Wheeler Segment
Commercial Vehicles Segment
Hero MotoCorp leads the Two-Wheeler sales in India with ~40% market share

Two Wheeler Sales Share, 2015

Others, 6%
Yamaha, 4%

Bajaj, 11%

Hero MotoCorp, 39%

TVS, 13%

Honda , 27%

Source: Media

IIMB Investment Fund Auto Sector Report

Key Trends: Two-Wheeler segment

Rural market demand to become moderate: Over the last three years, the Indian two-wheeler sector
has been recording muted CAGR of 6% as against long term average growth of 12%, due to increased
base of the industry along with high level of penetration
Scooters overtake bikes in growth term to continue: In the decade ending 2010, the bikes have
recorded higher growth, while the growth in scooters has slowed down, while in past 5 years (over FY10-
FY15), the volume growth of scooters has outpaced the bikes with domestic scooter volume growing by
25% average growth vs. 8% growth in bikes. Due to ease of driving gearless scooter and growing female
work-force, the domestic scooter segment is likely to record high double digit growth in next 5 years
Few new launches in two wheeler segment: Recent Auto Expo 2016 revealed very few new launches in
two wheeler segment. Honda launched Navi in motorcycle segment, which is bit different than existing
motorcycles in India. TVS displayed its already launched new Victor & Apache 200, and Akula 300 in
higher CC segment. Hero launched Splendor iSmart 110 and also displayed two new sports bike in 200-
250 CC segment to be launched in H2FY17. Though, Bajaj Auto did not participate in auto Expo, it
recently launched new Avenger and new V110 with good initial response

Source: Karvy Research

IIMB Investment Fund Auto Sector Report

Agenda
Industry Overview
Passenger Vehicles Segment
Two Wheeler Segment
Commercial Vehicles Segment
Tata Motors is the market leader with 45% market share

Commercial Vehicles Sales Share, 2015

Force Motors, 3% Others, 3%

Eicher, 6%

Ashok Leyland, 18% Tata Motors, 45%

Mahindra & Mahindra, 24%

Source: Media

IIMB Investment Fund Auto Sector Report

Confluence of factors supported healthy recovery in Domestic CV Industry in F16
After three years of declining trend, the Domestic Commercial Vehicle Industry
registered a growth of 12% in volume terms in FY 2016. Key reasons included:
Continuation of healthy replacement-led demand in case of M&HCV (Trucks)
Improving operating environment for fleet operators following reduction in diesel
prices and relatively firm freight rates
Gradual uptick in demand from construction and mining sectors
Implementation of BS-IV emission norms, which became mandatory across North
India and some nearby regions starting in October 2015
Governments ambitious 30km/day road construction and revival of stalled projects

Source: ICRA Research

IIMB Investment Fund Auto Sector Report