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[Key Points | Financial Year '11 | Prospects | Sector Do's and Dont's] y The Indian automobile segment can be divided into several segments viz. twowheelers (motorcycles, geared and ungeared scooters and mopeds), three wheelers, commercial vehicles (light, medium and heavy), passenger cars, utility vehicles (UVs) and tractors.
y Demand is linked to economic growth and rise in income levels. Per capita
penetration at around nine cars per thousand people is among the lowest in the world (including other developing economies like Pakistan in segments like cars).
y While the industry is highly capital intensive in nature in case of four-wheelers,
capital intensity is a lot less for two-wheelers. Though three-wheelers and tractors have low barriers to entry in terms of technology, four wheelers is technology intensive. Costs involved in branding, distribution network and spare parts availability increase entry barriers. With the Indian market moving towards complying with global standards, capital expenditure will rise to take into account future safety regulations.
y As compared to their global counterparts, both the two-wheeler as well as four
wheeler segments are relatively lesser fragmented. However, things are changing, especially on the passenger cars front as many foreign majors are eyeing the Indian market. As a result, pricing power is likely to diminish going
The scooters (geared & ungeared) improved their sales considerably. Expected to increase even further. Motorcycles accounted for 76% of the total two wheelers sold. Healthy growth in the agricultural and industrial sectors also fuelled demand for CVs. Bargaining power of Low. y The medium and heavy commercial vehicles (M/HCVs) segment saw its volumes grow by a huge 32% after having grown by an impressive 34% in FY10 as well. LCVs on the other hand.. The growth came in despite the series of interest rate hikes undertaken by the RBI to bring inflation under control. The 3-wheeler segment also performed well as domestic volumes improved 19% YoY. y While raw material prices softened considerably in FY10 and bolstered operating margins. a growth of a strong 26% over the previous year. After increasing by 26% in FY10. distribution network. average cost of selling an incremental unit comes down. This is the key reason why operating efficiency through increased localization of components and maximizing output per employee is of significance. As number of units sold increases. auto companies began to feel the pressure on operating margins on the back of rising raw material prices. y The tractor industry. y Automobile majors increase profitability by selling more units.8 m two-wheelers were sold in India in FY11. This is because the industry has a high fixed cost component. underperformed their HCV peers as volumes increased at a relatively lower rate of 23%. sales of passenger cars did well in FY11 as well as volumes grew by 30% YoY. TOP Financial Year '11 y A total of 11. Barriers to entry High capital costs. the scenario reversed in FY11. Utility Vehicles also logged in a strong growth of 19% in FY11. due to availability of options. the world¶s largest also logged in good growth in FY11. suppliers Bargaining power of Very high. A strong growth in GDP aided by recovery in agriculture and good performance in the industry and services sector had a positive impact on the same of passenger vehicles as well. Demand Largely cyclical in nature and dependent upon economic growth and per capita income. Key Points Supply The Indian automobile market has some amount of excess capacity. Although sales growth in FY11 remained strong.forward. due to stiff competition. technology. . The strong growth in the overall CV segment was due to high growth rates during the first half of the fiscal supported by sustained economic growth and impact of a lower base in the corresponding period last year. largely due to improved performance of the ungeared scooter segment. and availability of auto components. led by 22% growth in passenger carriers. Domestic volumes grew by 20% as against a growth of 32% in the previous year. Seasonality is also a vital factor. customers Competition High.
commercial vehicle. The recent launch of Tata Nano has brought about a new revolution in the country¶s small car segment. many other players in the industry are chalking out their plans to launch cars in this segment in the next few years. utility vehicles. Our research foresees a CAGR growth of around 12% in domestic volume sales of passenger vehicles during the forecast period. Indian Automobile Sector Analysis De-licensing in 1991 put the Indian automobile industry on a new growth trajectory. While the industry is going through cyclical hiccups currently. There are immense opportunities for various industry players including automobile manufacturers and players of automobile components. y With an estimated 40% of CVs plying on the roads being 10 years old. Despite economic slowdown. given the fact that non-farm incomes have continued to climb up. We expect a slew of launches in the Segment 'B' and Segment 'C' of passenger cars. While good monsoon is a positive for the sector. while fiscal FY09 saw volumes grow marginally. growing earning power and strong technological capability have been boosting automobile demand for past few years. . are also expected to witness fast growth in coming years. The strong performance continued in FY11 as well as volumes grew by 20%. Other segments. we expect this factor to weaken in the future on account of strong structural tailwinds. Each section succinctly explains the current and future market trends. the Indian automobile sector is expected to see high growth in coming years. However. The privatisation of select state transport undertakings bodes well for the bus segment. "Indian Automobile Sector Analysis´. volumes should still hold up pretty well despite a year or two of poor monsoons. multi-purpose. which attracted foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. said our new research report.TOP Prospects y The government spending on infrastructure in roads and airports and higher GDP growth in the future will benefit the auto sector in general. which constitutes around 80% of automobile sales. The longer-term picture is impressive in light of poor mechanisation levels in the country¶s farm sector and the thrust of the government on improving rural infrastructure. has immense growth potential as passenger car stock stood at around 11 per 1. TVS. demand for HCVs is expected to grow by 7% to 8% over the long term. The report covers various aspects of the Indian automobile market and gives detailed analysis of its various segments such as passenger vehicle. two wheelers and three wheelers. witnessing a growth of 32%. The passenger vehicle market. such as two-wheelers.000 people in 2008. especially in passenger cars segment. the tractor industry registered good growth in FY10 as well as FY11. Anticipating the future market potential. y Riding the wave of structural changes taking place in the country. Honda and Hero Motocorp are poised to benefit from higher demand for ungeared scooters in the urban and rural markets. motorcycles are expected to witness a flurry of new model launches. the same roared back in FY10. and developments in the Indian automobile market. multi-purpose vehicle and light commercial vehicle. Large middle class population. Seeing the good initial response from consumers. Utility vehicle segment is expected to grow at around 8% to 9% in the long-term. competitive pressure could keep prices and margins under control. Though the market size is expected to grow by 10% to 12%. the production of passenger vehicle is forecasted to grow at a CAGR of around 11% from 2009-10 to 2012-13. y In the 2-wheeler segment.
Value of auto component exports is likely to attain a double digit figure in 2012-13.3 Million Units in 2001-02 to 10. . This model takes into account the past and current trends in an economy.and microeconomic factors.87 Billion. resulting in heightened automobile production. exported auto component worth around US$ 2. exceeding 10 Million units by 2012-13. as India has low vehicle presence (with passenger car stock of only around 11 per 1.Study of the Indian automobile industry structure.Motorcycle sales will perform positively in future. government agencies. Research Methodology Used in the Report Information Sources The information has been sourced from various authentic and reliable sources like books. nonconventional vehicle market.Passenger car production in India is projected to cross three million units in 2014-15.Evaluation of factors fuelling growth in the Indian automobile market. Due to this large contribution of the industry in the national economy.000 people. Key Issues & Facts Analyzed in the Report . . and more specifically in an industry. "Indian Automobile Sector . The study has evaluated growth avenues available for the automobile market. . This took the Indian automobile production from 5. . The Indian automobile market is currently dominated by two-wheeler segment but in future. monitoring industry news and developments. The other reasons attracting global auto manufacturers to India are the country¶s large middle class population.Analysis of performance of industry sub-segments and their future outlook. green car market etc. These are the major findings of our new report. the Indian government lifted the requirement of forging joint ventures for foreign companies.Export of passenger cars is anticipated to rise more than the domestic sales during 2008-09 to 2015-16. . the Indian automotive industry provided direct employment to more than 300.Turnover of the Indian auto component industry is forecasted to surpass US$ 50 Billion in 2014-15. attracting foreign auto giants to set up their production facilities in the country to take advantage of various benefits it offers. India as global manufacturing hub. newspapers. industry portals. which include automotive design market. the demand for passenger cars and commercial vehicles will increase with industrial development. .Understanding the Indian auto component market and its growth aspects. sector and industry specific databases. De-licensing in 1991 has put the Indian automobile industry on a new growth track.Identification of future prospects for the Indian automobile industry.Discussion of the forces countering the market growth.Besides. . . Key Research Highlights .8 Million Units in 2007-08. and contributed 5% to the GDP. we have also comprehensively analyzed the auto component industry and its future outlook. trade journals and white papers.000 population in 2008). to bring out an objective market analysis. . Also. . strong technological capability and availability of trained manpower at competitive prices.Sales of passenger cars during 2008-09 to 2015-16 are expected to grow at a CAGR of around 10%. Analysis Method RNCOS industry forecast and analysis is based on various macro. which attracted global to the Indian market to establish their plants. growing earning power. and our in-house statistical and analytical model.A Booming Market´ In 2006-07. and through access to more than 3000 paid databases. trade associations. domestic tyre industry. it possesses substantial potential for growth. .
in the Indian vehicle sector. . Also a very large number of joint ventures have been set up in the auto-components sector and the pace is expected to pick up even further. sales. and export growth rates of the sector. $5. along with a mention of the major manufacturers. and the Government policy and competitive analysis. The automotive Industry in India is now working in terms of the dynamics of an open market. financial collaborations and JV's. The market strategies and the current status of the industry are highlighted in Chapter 12.An Analysis (20052010)" talks of the global automotive scenario whereas chapter 5 covers the Automotive Industry in India. both technical and financial with leading global manufacturers. . Chapter 13 covers the automotive dealer satisfaction study whereas . Chapter 6 discusses the automotive component sector. The market research report "Indian Automobile Industry . Many joint ventures have been set up in India with foreign collaboration.Identification of the opportunities for foreign companies in terms of exports.The component-wise share of production is assessed. Chapter 7 discuss about the performance of various Indian Vehicle Sectors. while Chapter 9 highlights the advantages. .Porter's Five Forces Analysis of the Industry . and business environment conducive to the success of the established and prospective foreign partnership ventures.Assessment of the implications of vehicle emissions . Chapter 8 provides a Five Forces competitive analysis of the Indian automotive Industry. Chapter 10 provides an overall assessment of the industry.Demand forecasts till 2010.7 billion is the investment envisaged in the new vehicles projects. technology transfers. Chapter 11 contains the demand forecasts up till 2009-10.An insight into the profiles of big players of the Indian automotive sector REPORT FEATURES The chapter 4 of the market research report "Indian Automobile Industry . With the inclusion of initial quality study. this report in itself is a complete guide to the producers and consumers in the auto industry.Our industry experts study the relationship between various industry and economic variables to ensure the required accuracy and desired check on the quality of data and information given in the report.An Analysis (2005-2010)" clarifies all doubts regarding sales satisfaction index and customer satisfaction index.Examines the production.An overview of the major changes occurring in the Indian market . strategic alliances. REPORT HIGHLIGHTS . opportunity and the obstacles of Indian auto industry. The Government of India is keen to provide a suitable economic. .A study of the market access strategies for companies .
the future prospects. during next short term . Chapters 2 and 3 of the report discuss the market overview. India to be No. To tap this large opportunity. opportunities and roadblocks in the growth of the Auto sector. Chapter 1 provides the global scenario of automotive industry.Market Overview" by RNCOS.The impact of these different competitive forces We have attempted to answer these questions. Finally. The component-wise share of production is assessed. .chapter 14 includes the recent issues & developments in the industry. strategic alliances.Government policy initiatives and their impact on business . background of the Indian Automotive Industry and the automotive component sector. And is expected to touch 10 million marks of which Commercial Vehicle Segment will contribute maximum. Assessment of the implications of vehicle emissions . Chapter 6 discusses the market access strategies for foreign firms whereas chapter 7 covers the recent issues and developments in the industry. Chapter 4 talks about Porter's five forces model.The emerging trends in the Automobile Industry . According to industry experts Indian Automobile sales will grow at a CAGR of 9.Demand that drives the automobile industry . This report provides a detailed porter analysis for the benefit of industry participants to analyze their competition and help them in better decision-making. Chapter 5 covers the opportunities and challenges faced by the industry and the obstacles related to them. This report gives an insight into the Indian automobile sector with respect to recent trends and happenings.Behavior of different competitive forces. We believe that our analysis and outlook of Indian Automobile industry would serve as a key input for your business decisions and performance evaluation. through the RNCOS Industry Information Service on Automobile Industry. Indian Automobile sector is high on growth trajectory. Identification of the opportunities for foreign companies in terms of exports. 3 auto market by 2015 .Porter's Five Forces Analysis of the Industry. sales.45 million units in FY05. RNCOS has undertaken porter's Five Forces Analysis to evaluate the auto industry on the level of competition. The market research report by RNCOS provides a detailed analysis of competition in the industry. Indian automobile companies and global automotive giants have announced huge expansion plans and are seeking answers for some critical questions like . financial collaborations and JV's.5% to 13008 million by 2010 from current 8. chapter 15 and 16 details the key players in the industry and company analysis of auto ancillary industry. technology transfers.A study of the market access strategies for companies REPORT FEATURES All the aspects related to the auto industry are taken into account in the report "Indian Auto Industry . along with a mention of the major manufacturers. REPORT HIGHLIGHTS Examines the production. in the Indian vehicle sector. and export growth rates of the sector. Apart from inter industry rivalry there are other forces also with which company competes in a business environment.An overview of the major changes occurring in the Indian market .Strategies required to enter Indian market .
´ Sehgal said.´ While it may be difficult for newer entrants in the commercial vehicle market to dent the market share of incumbents such as Tata Motors Ltd. by virtue of having a first mover advantage. India is an attractive but not an easy market and there will be losses and casualties in the coming years. said at a press briefing. according to Rothschild. Its market share is also likely to drop to 27% in the same period.Auto makers in India will make thrice the investment in creating capacities in the coming decade than what they have done between 1983 and 2010. the UK-based global financial advisory firm.5 million units by the end of 2011-12. which includes cars. is expected to be 3. Car production capacity in the country is expected to increase from 4. With rival car makers pricing models at a premium compared with Maruti. India is the only market to be tapped.000-500. global head of automotive industry at Rothschild. the US. and Toyota Motor Corp. which. General Motor Corp. making it difficult for firms such as Maruti to maintain margins and market share. These numbers will roll out from 30 new factories in eight years.8 million units in 2010 to 12 million in 2018. an average Volkswagen car costs $17. Japan and Brazil. has been taking a beating from rival car makers like Volkswagen AG in all the major markets of the world. Sehgal expects Maruti¶s share of gross profit to shrink to 16% in 2015 from 24% in 2010.000 new jobs. Auto makers in India will make thrice the investment in creating capacities in the coming decade than what they have done between 1983 and 2010. he said. The market. To create this capacity. which will in turn create 300. trucks and auto parts.. ³Suzuki Motor Corp. have established a wide sales and service network. Currently.000-500. ³There¶s no reason why India should be different.5% in the first half of the current fiscal. Vikas Sehgal. China. Maruti¶s market share has whittled down from 82% in 1997 to 39. India is the sixth largest market after China. Sehgal said.000. the US and India²that will be the pecking order of the global automobiles market by volumes by 2015. With the Chinese market reaching a sizeable scale for global auto firms such as Volkswagen. . market leader Maruti Suzuki India Ltd is set to further lose market share and margins in this period as competition will intensify. To be able to maintain its current market share in 2020.000 new jobs. according to Rothschild. this is three times the investment made by the firm since the 1980s and is equivalent to building 12 new plants and increasing annual production capacity by three million vehicles.000 compared with Maruti¶s $7. fresh investment of $30 billion to $40 billion would be made by manufacturers. Germany. Maruti needs to invest $12 billion. This will in turn create 300. According to Sehgal. for newer entrants in the car market replicating the success of Maruti is not so tough. According to the report. the report said. said the Rothschild report titled µIndia 2030²An Automotive Powerhouse¶.
This will increase further. While Maruti Suzuki India (MSI) posted 17. Cumulative sales of Nano this fiscal so far is lower by 3% at 39.´ he added. is putting together a blueprint to establish its dealer presence in similar geographies. ³Nano is being sold from about 704 outlets at present. which recently launched its Rs 2. it is intensely scanning the interior India.000 population). Patanjali (Andhra Pradesh). where Tata Motors has no presence so far. Hyundai. However. Barshi (Maharashtra).Rothschild is bullish in its outlook for the Indian automotive industry and predicts a flurry of mergers and acquisitions in the coming decade. MSI said its total passenger car sales in the domestic market declined to 66. With just 80 exclusive Nano dealership outlets operational at present. Cars sales in the country had declined in July and August. Gajraula (Uttar Pradesh). This will primarily be in the commercial vehicle and two-wheeler sectors. When sales are falling below expectations. it is intensely scanning the interior India. Nano sales are yet to show substantial improvement although the sales in November was 12-fold high (6. Dehgam (Gujarat) and more such tier-III and tier-IV small towns. The firm expects auto companies to make large acquisitions to access markets and gain technical wherewithal. where we did not have presence. the company is banking on dealership expansion into virgin geographies across India. others like Hyundai Motor India Ltd (HMIL). Tata Motors scans interior India for Nano sales points Tata Motors is banking on dealership expansion into virgin geographies across India.7 lakh small car Eon. Bhadrak (Orissa). In a bid to take Nano to tier III and tier IV towns.2% decline in domestic vehicle sales due to labour unrest at its Manesar plant disrupting production.667 units in September from 81. Suryapet (Andhra Pradesh). Vita (Maharashtra). Naihati. Tata Motors will have to battle it out with Maruti Suzuki which currently has the largest dealership network of 980 plus and is expanding.976 units for the year-ago period. (West Bengal).060 units in the same month of 2010. Finding good dealer partners in these locations also pose huge challenge for the company. Tata Motors needs to do a lot to achieve its target of 300 by March 2012. as high interest rates and rising petrol prices kept customers away from new purchases.401 units) when compared to the particularly low number of 509 units in the same month a year ago. Tata Motors and Toyota Kirloskar Motor and General Motors India didn¶t face such problems. where Tata Motors has no presence so far. .646 units against 40. it said.´ said the company spokesperson. In small town India. ³We have recently commenced operations in cities like Balurghat (West Bengal). Rajpura (Punjab). In a bid to take Nano to tier III and tier IV towns (with less than 200.
78. Honda Motorcycle & Scooter India (HMSI) also reported 44% jump in its total sales to 1.545 units in the same month last year.617 units in the same month last year.9% to 7.756 units in same month last year. HMIL on the other hand said its car sales grew by 13.235 units in the same month last year.92.801 units as against 8. ³This is a positive sign for us at the onset of the festive season. Riding on strong demand for its latest models µEtios and µLiva . as against 33.³The disruption in production owing to the labour issue at the company¶s Manesar plant during September adversely impacted the sales numbers during the month. Ford India¶s domestic sales dipped 6.2% to 35.877 units in the same month last year. Toyota Kirloskar Motor (TKM) posted over two-fold jump in sales to 12.462 units. TKM deputy managing director (marketing) Sandeep Singh said. . In the two-wheeler segment. Suzuki Motorcycle India posted 29% increase in sales in September this year to 29.831 units in September last year. Chennai-based TVS Motor Company reported 16% increase in domestic sales last month to 1.418 units in the same month last year.094 units as against 22.807 units in September from 6. Yamaha Motor said its September sales grew 28% at 43.35% jump in sales in September at 10.´ it said. Commenting on the sales performance. which are witnessing sales growth during the month are mainly driven by new models. In spite of a sluggish market we expect Eon to boost our sales and increase market share. HMIL director (marketing and sales) Arvind Saxena said: ³We will launch our much awaited compact car Eon this month.22% increase in total passenger vehicles sales in the domestic market at 26. Keeping the positive trend. GM India vice-president P Balendran said: ³The market continues to be sluggish due to repeated hike in interest rates and rising fuel prices.027 units.´ Most of the companies.112 units as compared 8.462 units during the month as against 1.955 units from 31. he added. which is creating tremendous pressure in the automobile market.´ Tata Motors also reported 10.380 units in the same month last year.944 units in the same month last year.65. as against 1. General Motors India reported 17. as against 23.319 units in September.23.
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