Automobile

Sector

Presenters:
Anirudh Tiwari (Roll No 7)
Chandni Sharma (Roll No 16)
Lalit Mohan Pant (Roll No 26)
Swati Luthra (Roll No 51)
Contents

• Profile of Indian Automotive Industry

• Growth Potential of Indian Automotive Industry

• India as a Manufacturing Hub

 PROFILE OF INDIAN
AUTOMOTIVE INDUSTRY
Indian auto industry has entered the era of
globalisation
Indian automobile industry crossed a historic landmark of
10 million vehicles in 2006-07

• The Indian auto industry has the

potential to emerge as one of the
largest in the world. Presently,
India is
-Second largest two wheeler market
in the world

-Fourth largest commercial vehicle

market in the world

-11th largest passenger car in the

world and is expected to be the
seventh largest market by 2016.
THE OEM AS WELL AS THE COMPONENT
INDUSTRY IS HIGHLY COMPETITIVE
 THE OEM AS WELL AS THE COMPONENT
INDUSTRY IS HIGHLY COMPETITIVE

• The Indian auto industry is highly competitive

with a number of global and Indian auto
companies present

• The supplier industry is equally competitive

with a mix of global and Indian players
Most automotive players are present in more than
one segment
Two wheelers industry is dominated by
motorcycles
 Two-wheelers industry is dominated by motorcycles

--Domestic two-wheeler industry has steadily grown at a CAGR of 9.5 per cent to reach
7.25 million units in 2006-07

--Motorcycle segment has attained highest growth and dominates the market

--Entry level bikes (engine power below 125 cc and price US$ 850-1,100) account for
around 80 per cent sales

--Cost of ownership and economics of operation are key purchase criteria

--Premium bike segment (engine power above 125 cc and price US$ 1,200- 2,000)
growing at a faster pace as compared to the entry level vehicles, an indication of
increasing affluence of users

--Some manufacturers have opted out of 100CC segments and are positioning the 125cc
as entry level
While the motorcycles segment is growing, the
scooter segment is shrinking

• Scooter segment as a whole has

been shrinking, except for the A2
segment

• Bikes having engine capacity 75-

125 cc corner the major share of
the two wheeler market

• B3 segment is the fastest growing

segment in the Indian two
wheeler market.
 The domestic two wheeler market is
dominated
by Indian as well as foreign players
-Hero Honda: Largest Two-wheeler manufacturer in
the world
-Bajaj Auto: Second largest Two-wheeler
manufacturer in India and the largest 3 wheeler
manufacturer
-TVS Motor Co: Third largest Two-wheeler
manufacturer in India. Established a
manufacturing facility in Indonesia
-Honda Motors: Has recently entered the Indian
market through its direct subsidiary (in addition to
its joint venture Hero Honda)
-Suzuki: Has recently entered the Indian market
through its direct subsidiary
 The domestic two wheeler market is dominated
by Indian as well as foreign players

• In the Two-wheeler market in India, competition is intense with

around 10 players competing for the share of the industry

• The players include global giants like Honda, Suzuki, Yamaha as

well as Indian players like Bajaj and TVS

• The market leader is Hero Honda Motors, closely followed by Bajaj

Auto

• Industry is characterised by frequent new product launches, with

over 22 models launched in 2007-08
Two wheelers exports have grown at an
impressive CAGR of 41%
 Two wheelers exports have grown at an
impressive CAGR of 41%
• Exports of two wheelers have grown at over 41 per cent CAGR in last
six years

• Majority of exports are to Bangladesh, Sri Lanka, Bhutan and Nepal

• Highest growth (year on year growth of 79 per cent) witnessed in the

above 125 CC motorcycles segment, which constituted 36 per cent of
two wheeler export market up from previous year’s 26 per cent.

• 58 per cent of the bikes exported were those with engine capacity
below 125 cc.

• Bajaj Auto is the market leader in exports with 59 per cent share.
Passenger vehicles segment in India is
dominated by cars
 Passenger vehicles segment in India is
dominated by cars

• The domestic Indian passenger vehicles market has

grown at a CAGR of 14.8 per cent over the last six years
to reach 1.5 million units in 2007-08.

• Passenger cars, contributing to 78 per cent of volumes,

grew at a CAGR of 15 per cent.

• The remaining share is with utility vehicles and sports

vehicles
All major global players in passenger vehicles
segment
have a presence in India
• Maruti Udyog: Largest passenger car
manufacturer in the country, India
considered as strategic market by Suzuki

• Tata Motors: Largest automotive player

in the Indian industry; launching the Rs. 1
lakh (US$ 2,500) car

• Hyundai Motors: Third largest

passenger car manufacturer in India, has
established India as one of its
manufacturing bases in the world
 All major global players in passenger vehicles
segment
have a presence in India

• Mahindra & Mahindra: Amongst the largest players in the multi utility
vehicles segment, has tied up with Renault for manufacturing and
marketing of Logan brand of cars in India

• Toyota: Has vision of capturing 10 per cent share of the Indian passenger
car market by 2010

• Honda Motors: One of the leading players in the Indian premium cars
segment

• Ford: Leading player in the premium cars segment

• General Motors: Leading player in the premium segment; entered the

compact car segment recently
 All major global players in passenger vehicles
segment
have a presence in India

• There are more than a dozen manufacturers in the industry

• Most of the leading global players have a presence in India in the

form of joint ventures or subsidiaries

• The industry leader is Maruti Udyog with 46 per cent market share,
closely followed by Tata Motors and Hyundai Motors at 15 per
cent and 14 per cent respectively
India is increasingly becoming a manufacturing
hub for passenger cars
 India is increasingly becoming a manufacturing
hub for passenger cars

• Exports of cars from India have grown at a CAGR of 26 per cent

CAGR in the last six years to reach 217 thousand units in 2007-08.

• Hyundai Motors is the market leader in exports of cars with 66 per

cent share up from previous year’s 58 per cent share; the company
uses India as a manufacturing base for compact cars across the
globe.

• Exports are made to South America, Africa, Europe, Latin America

and the Middle East
 Commercial vehicles segment has witnessed
the highest growth rate in the automotive industry
 Commercial vehicles segment has witnessed
the highest growth rate in the automotive industry

• Domestic CV industry sales reached 486.82 thousand vehicles in

2007-08, registering a CAGR of 22 per cent over last six years.

• Share of LCVs is gradually increasing, indicating the emergence of

hub and spoke model of transportation

• In 2007-08, M&HCV passenger vehicles lead the growth at 34 per

cent over the last year.

• Goods industry is dominated by multi axle vehicles, which account

for nearly 50 per cent of the market
 CV INDUSTRY IS DOMINATED BY INDIAN
PLAYERS
• Tata Motors Ltd: Largest commercial vehicle
manufacturer in the country, has acquired the Korean
manufacturer Daewoo Gap Motors

• Ashok Leyland Ltd: Second largest player with

considerable market share in M&HCV segment; has
formed a JV to manufacture LCVs with Nissan

• Mahindra & Mahindra Ltd: Relatively new player in

the segment; has formed JV with International Trucks to
manufacture M&HCV trucks in India

• Eicher Motors Ltd: Leading player in the LCV trucks

segment; has entered the M&HCV trucks segment
recently

• Swaraj Mazda Ltd: One of the leading players in the

LCV segment

• Volvo India: One of the leading players in luxury

passenger buses and heavy duty tippers
CV industry is dominated by Indian players

• Tata Motors is the market leader in both goods and passenger

segments, closely followed by Ashok Leyland

• LCV market is dominated by Tata Motors, followed by Mahindra &

Mahindra

• Introduction of Tata Ace has contributed significant growth in the

sub one tonne segment

• Many players are in the process of strengthening their hold in the

market through JVs .
Indian CV exports have witnessed a
more impressive growth
Indian CV exports have witnessed a more impressive
growth

• Exports have grown at a fast pace of over 30 per cent over the last
six years.

• Tata Motors accounts more than 70 per cent of the CV exports, with
Ashok Leyland and Mahindra & Mahindra making up for a large
portion of the balance.

• LCV goods carriers accounted for 52 per cent of the overall exports

• Major portion of the exports are to Sri Lanka, Gulf countries and
Africa
Growth in three wheelers has been driven by the
need
for low cost last mile transportation system
 Growth in three wheelers has been driven by the
need
for low cost last mile transportation system

• Three Wheeler sales in India touched a new record of 0.36 Million

registering a growth of 10.5 per cent CAGR over the last six years

• The proportion of Goods carriers in the proportion of overall sales

has doubled indicating towards the increased need for low cost last
mile transportation systems

• Sub 3.5 tonne segment in goods accounted for 71 per cent of the
sales and Sub Four seater segment in passenger versions
accounted for 97 per cent of the sales
 The three wheeler market is dominated by
Bajaj Auto
• Bajaj Auto Ltd. : Market leader in the three wheeler
segment, in the process of revamping its product
portfolio

• Piaggio Vehicles : The Italian manufacturer is one of the

leading players with fast growing market share, in the
process of making India as their global hub

• M&M Ltd: One of the leading players in the segment

• Atul Auto Ltd: Have introduced new products in the rear

engine segment, and also is a manufacturer of ‘Chakda’’ a
Three wheeler reengineered from Two wheeler, popular
in the western parts of the country

• Force Motors Ltd: A JV between Bajaj Tempo and MAN

AG of Germany; leading player in the goods segment
The Three wheeler market is dominated
by Bajaj Auto

• Bajaj Auto emerged the leader in Three Wheeler industry with 42

per cent share, closely followed by Piaggio with 41 per cent share

• Bajaj Auto lead the passenger carrier segment with 54 per cent
share, while Piaggio lead the goods segment with 44 per cent
market share
 Exports of Three wheelers have been growing
rapidly,
with Bajaj Auto the clear market leader

• Exports of three wheelers touched a

new high of 141.24 thousand units,
registering a robust growth of 44.5
per cent CAGR over the last six years

• This has been contributed almost

entirely by Bajaj Auto, which
accounted for around 97 per cent of
exports in 2006-07

• Bajaj Auto exports to Sri Lanka,

Egypt, Nepal, Bangladesh among
other countries
Indian firms are increasingly partnering with foreign
firms
Three major automotive clusters exist in
India

• Major automotive clusters - Mumbai-Pune-Nasik- Aurangabad

(West), Chennai-Bangalore-Hosur (South) and Delhi-Gurgaon-
Faridabad (North)

• Export oriented companies have formed base in the West/South

regions, due to proximity to ports
Three major automotive clusters exist in
India
Three major automotive clusters exist in
India
Three major automotive clusters exist in
India
Indian Auto Policy is designed for supporting
the growth of the industry
 Indian automotive regulations are in the process
of being aligned with European regulations

-Indian automotive regulations are closely

aligned to the ECE regulations. The
diagram below depicts the level of
alignment of the Indian regulations with
the ECE regulations

-The key regulations that are likely to

impact the auto industry and create the
need for world class products in the
future are crash related regulations and
introduction of Bharat Stage IV norms
Safety and emission related regulations in India
- Achievements and Plans
GROWTH POTENTIAL OF INDIAN
AUTOMOTIVE INDUSTRY
Growth drivers for the Indian automotive
industry
 Indian Automotive Mission Plan – Vehicle sales
expected to grow to 32 million by 2015-16
• The size of the Indian automotive industry is
expected to grow at 13 per cent p.a over the next
decade to reach around US$ 120-159 billion by
2016

• The total investments required to support the

growth are estimated at around US$ 35-40 billion

• The Two wheelers industry is expected to lead the

growth, with an estimated sales of 27.8 million
units by 2016

• Total export in the automotive sector would be

around US$ 30-35 billion, of which component
exports would account for US$ 20-25 billion and
vehicle exports for the rest
 INDIA AS A
MANUFACTURING HUB
 Global passenger car companies are taking advantage
of India’s manufacturing base

• Nissan Motor Co. has identified India as one of the five low-cost countries to
manufacture its new generation compact cars, including the Micra.

• Volkswagen is investing in 110,000-unit passenger car assembly plant,

expected to be operational by end of 2009. Volkswagen’s India plans
include manufacture of small cars based on the ‘Polo’ platform.

• Toyota has announced plans for a second plant to begin operations in 2010,
having an initial annual production capacity of around 100,000 vehicles
apart from the transmission plant which it had already setup to meet the
regional demand.
 Global passenger car companies are taking advantage
of India’s manufacturing base

• Hyundai Motors - Hyundai has shifted its entire production of the Atos
Prime, its compact model, to its Chennai Plant. It has also set up a US$ 40
million computer-aided design centre in Hyderabad. For the newly
launched Model i10,India would be the sole manufacturing base. The
company also plans to invest a further US$ 250 million in India by 2013,
raising its cumulative investment in the country to around US$ one billion.

• General Motors, the US$ 60 million technical centre in Bangalore will be

its powerhouse for developing future technologies and shaping new cars.
• Ford Motor Co: It exports 58 per cent of the total production from India.

Source: Industry News

Indian Auto Industry is witnessing more JVs and
acquisitions than ever.
• Mergers, acquisitions and joint ventures have continued to be the driving force in the
Indian automobile industry in sync with the dynamics of an open market. Leading
automobile companies have either set up their own manufacturing base in India or
have tied up with Indian automotive firms to roll out new products from Indian
market. The list includes International, MAN, Daimler, Toyota, Nissan, Renault,
Fiat, Honda, Kawasaki, Cummins and many more. During the first half of 2008,
Daimler AG bought 26 per cent stake in Sutlej Motors.

• Indian companies have also been bullish in acquiring foreign automobile companies
to reinforce their presence in the global market. The landmark deal in the first half
of 2008 has been Tata Motors’ acquisition of Jaguar-Land Rover from Ford for US$
2.30 billion. During this period M&M acquired three Italian companies - GR Grafica
Ricerca, Metalcastello and Engines Engineering.
Several factors make India a favorite
investment destination
Conclusions
• India has a cost advantage when compared to Brazil

• However, India suffers from a cost disadvantage vis-à-

vis China and Thailand, primarily due to high level of
taxes and their cascading impact

• India, in the near future is expected to go ahead with the

abolition of interstate Central Sales Tax (CST), which
will reduce the cascading impact of taxes to some extent
Conclusions
• Implementation of Goods & Services tax (along the lines of VAT)
and abolition of all other taxes by 2010 is under consideration,
which will reduce the taxation loading on the automotive sector
considerably. This step is expected to strengthen India’s future
position as a leading automobile manufacturing hub

• Various steps being taken by the Indian government in improving

infrastructure would reduce the disadvantage that India suffers
from because of poor infrastructure that causes project delays,
delays in deliveries and so on.
This would increase the demand for road transportation in the
country