Automobile Industry Essay Example for Free

Automobile Industry EssayStrong demand growth payable to rising incomes, growing middle class, and a young population is likely to propel India among the worlds top five auto-producers by 2015 Growth in export demand is also set to accelerate.Tata Nano and the upcoming Pixel have opened up the potentially large ultra low cost car segment Innovation is likely to intensify among engine technology and alternative fuels.vantage IndiaRising investmentsPolicy congestIndia has significant cost advantages auto firms go along 10-25 per cent on operations in India comp atomic number 18d to Europe and Latin America A large pool of skilled manpower and a growing technology base will induce greater investments. The government aims to develop India as a global manufacturing as well as RD hub There has been a tolerant array of policy support in the form of sops, taxes and FDI encouragement.FY10 food market size USD57.7 billionNotes RD Research and ripening, FDI Foreign direct investme nt FY Indian financial category (April March) FY16E estimated figure for financial year 2016 estimates are from the governments Automotive Mission Plan (2006 2016) ADVANTAGE INDIA.For updated information, divert visit www.ibef.org.3.Automotives direful2012Contents Advantage India Market overview and trends Growth drivers Success stories Maruti, Tata Motors Opportunities Useful informationFor updated information, occupy visit www.ibef.org4Automotives imposing2012Evolution of the Indian automotives sector20.4 gazillion units (2012) 11 million units (2007) 2008 onwards 0.6 million units (1992) 1983 1992 0.4 million units (1982) Before 1982 Closed market Only 5 players Joint venture (JV) Indian government and Suzuki to form Maruti Udyog started production in 1983 Component manufacturers also entered via JV route Buyers market 1993 -2007 Sector de-licensed in 1993 Major original equipment manufacturers (OEMs) started assembly in India Imports allowed from April 2001 Introduction of encourage added tax in 2005 More than 35 players in the market Removal of most import controls Indian companies gaining global identity Long waiting periods and noncurrent models Sellers marketSource Tata Motors, Society of Indian AutomobileManufacturers (SIAM), Aranca Research, Notes JV Joint Venture trade OVERVIEW AND TRENDSFor updated information, please visit www.ibef.org5AutomotivesAUGUST2012The automotives market is split into four segmentsAutomobiles twain-wheelersrider fomitesCommercial vehiclesThree-wheelersMopedsPassenger carsLight mercenary vehiclesPassenger carriersScootersUtility vehiclesMotorcyclesMulti-purpose vehiclesMedium and heavy commercial vehiclesGoods carriersElectric dickenswheelersFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS6AutomotivesAUGUST2012Revenues have been growing at a strong whole toneGross turnover of automobile manufacturers in India expand at a CAGR of 17.7per cent over FY07-1 1 Excludin g three wheelers, cars account for the largest share of revenues (66.2 percent in 2010) Revenue trends over the past few historic period in USD million70.0 60.0 50.0 40.0 30.5 30.0 20.0 10.0 0.0 FY07 FY08 FY09 FY10 FY11 66.2% 36.6 33.3 21.5% Trucks Cars 58.6 CAGR 17.7% 43.3Market* break-up by revenues (2010)12.3%Two WheelersSource SIAM, Datamonitor, Aranca ResearchNote *does not include three wheelersFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS7AutomotivesAUGUST2012Sectors growing strength evident from rise in total production figures Total production of automobiles in India (million units)16.012.0 7.6 8 8.4 10.0 8.0 6.0 1.3 0.4 0.4 1.2 0.4 0.4 1.6 0.6 0.5 1.3 0.5 0.6 1.8 2.4 4.0 6.5 8.5Notes CAGR complex annual growth rate10.5Passenger vehicles was the fastest growing segment during that period with a CAGR of 14.5 per cent14.013.40.8 0.83.02.00.0FY05FY06FY07FY08FY090.4 0.5FY100.6 0.6FY11FY12Passenger vehicle Three WheelersCommercial Vehicle Two W heelersSource SIAM, Aranca ResearchFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS0.8 0.83.115.5Automobiles production increased at a CAGR of 13.2 per cent over FY05-1218.08AutomotivesAUGUST2012Market break-up by production volumeTwo wheelers dominate production volumes in FY12, the segment accounted for more than three quarters of total automotives production in the surface areaMarket share by volume (FY12)In fact, India is the worlds second largest two wheeler producer the country is also the fourth largest commercial vehicle producer4% 4% 16% Two Wheelers Passenger Vehicle Commercial Vehicle Three Wheelers 76%Source SIAM, Aranca ResearchFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS9AutomotivesAUGUST2012Market break-up of individual segments by production volumes (1/2)Shares in production of passenger vehicles (FY11)Shares in production of commercial vehicles (FY11)11.5%Passenger cars8.1% 36.0% MCV HCV Passenger Carrie rs MCV HCV Goods Carriers LCV Passenger Carriers 49.7% 6.1% LCV Goods CarriersUtility vehicles/multipurpose vehicles 88.5%Source SIAM, Aranca Research Notes LCV Light commercial vehicle MCV Medium commercial vehicle HCV Heavy commercial vehicleFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS10AutomotivesAUGUST2012Market break-up of individual segments by production volumes (2/2)Shares in production of three wheelers (FY12)Shares in production of two wheelers (FY12)15.8% Goods carriers15.6%5.3% MopedsMotorcycles Passenger carriers Scooters 84.2% 79.1%Source SIAM, Aranca ResearchFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS11AutomotivesAUGUST2012Exports have also grown strongly (1/2)Automobiles export volumes increased at a CAGR of 22.4 per cent over FY05FY12 Over this period, the fastest growth was in the two wheeler segment (25.8 per cent) followed by three wheelers (21.9 per cent)Exports of automobiles from India (mil lion units)2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2 0.5 0.6 0.8 1 0.5 1.1 0.5 1.5 0.4 0.5 0.3 0.2 0.03 0.10.2 0.04 0.10.2 0.05 0.10.2 0.06 0.10.04 0.20.04 0.20.08 0.3FY05FY06FY07FY08FY09FY10FY11FY12Passenger VehicleCommercial VehicleThree WheelersTwo WheelersSource SIAM, Aranca ResearchFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS0.10.412AutomotivesAUGUST2012Exports have also grown strongly (2/2)Two wheelers accounted for the largest share in exports (by volume) at 67 per cent in FY12 Passenger vehicles account for a plenteous 18 per cent of overall exportsExports shares by volume (FY12)18% Passenger Vehicle 3% 12% 67% Commercial Vehicle Three Wheelers Two WheelersSource SIAM, Aranca ResearchFor updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS13AutomotivesAUGUST2012Presence of a clear leader in each segment of the marketThe automotives industry is concentrated with market leaders in each segment commanding a share of over 40 pe r centMarket draw Passenger Vehicles MCVs HCVs LCVs Three Wheelers 45% 16%Others15% 7%63%23%7%59%30%4%4%41%40%10%MotorcyclesScooters59%24%7%6%51%21%14%Source SIAM, Aranca ResearchNotes Data is for FY1010%For updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS14AutomotivesAUGUST2012Notable trends in the Indian automotives sector Large number of products available to consumers across various segments thisNew product launcheshas gathered pace with the entry of a number of foreign players Reduced overall product lifecycle have forced players to employ quick productlaunchesImproving productdevelopment capabilities Increasing RD investments from both(prenominal) the government and the private sector Private sector innovation has been a key determinant of growth in the sectortwo good examples are Tata Nano and Tata Pixel while the former has been a success in India, the latter is intended for foreign markets In FY11, the CNG market was worth more than USD330 mill ion and CNG cars selection fuelsand taxis are expected to register a CAGR of 28 per cent over FY11-FY14 The CNG distribution network in India is expected to increase to 250 cities by2018 from 30 cities in 2009For updated information, please visit www.ibef.orgMARKET OVERVIEW AND TRENDS15AutomotivesAUGUST2012Contents Advantage India Market overview and trends Growth drivers Success stories Maruti, Tata Motors Opportunities Useful informationFor updated information, please visit www.ibef.org16AutomotivesAUGUST2012Sector has been benefitting from strong demand and product innovationGrowing demand Growing demandPolicy support Strong government supportIncreasing investmentsRising incomes, young populationInviting Greater availability of credit and financing optionsGoal of establishing India as an automanufacturing hubRD focus GOI has set up technology modernisation fund Large domestic market Policy sops, FDI encouragementResulting inRising investments from domestic and foreign players Greater innovation in products market partitionStrong growth in exports as wellStrong projected demand making returns attractiveNotes GOI Government of IndiaFor updated information, please visit www.ibef.orgGROWTH DRIVERS17AutomotivesAUGUST2012Rising incomes and a growing middle class driving domestic demand growth Rising incomes growing middle class changing income dynamics of Indias population70 million households Aspirers annual income INR90,000200,000 Seekers annual income INR200,000500,000 Strivers annual income INR500,0001,000,000 Globals annual income INR1,000,000Personal (nominal) disposable income is expected to rise annually at 8.5 per cent over FY11-15 Rising middle class size of the middle class expected to touch 550 million by 2025 from 50 million in 2010 Favourable demographics a young population is also driving up the demand for cars Demand for commercial vehicles have got a boost due to development of roadways and greater market access6050 40 30 20 10 0 2005 Stri vers 2010 Seekers 2015 DeprivedDeprived annual income