Presentation on Landscape of Automobile Industry in India

Consulting Club

Evolution of Automobile Industry

Initial Years Manufacturing was licensed

High Customs duty on import

Steep excise duties & sales tax

2 Major players: Premier Automobiles Ltd & Hindustan Motors

1980s

Entry of MUL, better product, with government support

Sellers Market

Long Waiting PeriodsEarly to mid 90s

Sellers market and long waiting periods

Delicensing in 1993

Removal of capacity restrictions

Decrease in customs & excise

Auto finance boom- more players (foreign banks & non banking companies, better schemes.

Mid 90s Early 2000s

Buyers market

Increase in Indigenization

Easy Auto finance

Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market

AUTOMOBILE2 WHEELER3 WHEELERPASSENGER VEHICLECOMMERCIAL VEHICLEMOTORCYCLESCOOTERSSCOOTERETTESMOPEDSI.C.V.M.C.V.H.C.V.

Trends in the automobile sector CAGR 15.4%CAGR 14.2%CAGR 39%Domestic Sales have been growing strongly Exports have nearly tripled in the last 5 yearsLargest three wheeler market in the world4th largest passenger vehicle in Asia4th largest tractor in the market5th largest commercial vehicle market in the world

Segment wise market shareTwo WheelerThree WheelerPassenger vehiclesCVsThe industry has not experienced much change in its structure over the last 6 yearsTwo- wheelers form the major share of domestic sales Passenger vehicles lead the exports market(57.4%)2 wheelers form the bulk of exports as well, but are losing share to Passenger vehiclesThe growth in the two wheeler market is driven by the motorcycle market and is expected to grow at 14-15 % YOY

Chart1

4.03

13.44

78.63

3.9

CVs Passenger vehicles Two wheelers Three wheelers

78.63%

13.44%

4.03%

3.9%

Sheet1

CVs4.03

Passenger vehicles13.44

Two wheelers78.63

Three wheelers3.9

Sheet2

Sheet3

The Key PlayersTwo wheelerPassenger vehicle

Commercial vehiclesTATA Motors, Ashok Leyland, Swaraj Mazda,Mahindra & Mahindra ,Force motors, Eicher Motors Passenger vehicleTATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan MotorsTwo WheelerHero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic MotorsThree WheelerBajaj Auto, Piaggio India

Chart1

4.03

13.44

78.63

3.9

CVs Passenger vehicles Two wheelers Three wheelers

78.63%

13.44%

4.03%

3.9%

Sheet1

CVs4.03

Passenger vehicles13.44

Two wheelers78.63

Three wheelers3.9

Chart2

8.5

39.8

24.4

17.7

3.8

5.8

Bajaj Auto, 24.4%

TVS Motors, 17.7%

Yamaha, 3.8%

Others, 5.8%

Honda Motors, 8.5%

Hero Honda, 39.8%

Sheet2

Honda Motors8.5

Hero Honda39.8

Bajaj Auto24.4

TVS Motors17.7

Yamaha3.8

Others5.8

Sheet3

Chart1

50.3748.98

19.1719.71

17.1917.03

5.334.58

5.735.95

Q1 2005-06

Q1 2006-07

Sheet1

Q1 2005-06Q1 2006-07

Maruti50.3748.98

Hyundai19.1719.71

Tata Motors17.1917.03

Honda5.334.58

Others5.735.95

Q1 2005-06

Fiat0.220.23

GM1.122.1

Hind Motors1.741.41

Diamler Chrysler0.210.17

Skoda1.11.24

Toyota1.340.8

Sheet1

00

00

00

00

00

Q1 2005-06

Q1 2006-07

Sheet2

00

00

00

00

00

00

Q1 2005-06

OTHERS

Sheet3

Favorable Demographics Improving income curve Reducing interest rates

Cost Pressure High Expectations Inadequate Infrastructure Development KEY CHALLENGESKEY ENABLERSKey Focus AreasProduct development( includes collaboration, new products developed)Vendor base (quality of vendors, skill levels , size etc.)Manufacturing capability( quality levels, productivity & skill levels, technology )Service levelsSupply chainLabor lawLeverage IT

Key Features of Future Auto PolicyForeign Direct Investment Import tariff Incentives for Research and Development (R&D) Environmental Aspects Other measures

Domestic Market Share for 2009-10Passenger Vehicles15.86Commercial Vehicles4.32Three Wheelers3.58Two Wheelers76.23

Automobile Production Trends(Number of Vehicles)Category2003-042004-052005-062006-072007-082008-092009-10Passenger Vehicles989,5601,209,8761,309,3001,545,2231,777,5831,838,5932,351,240Commercial Vehicles275,040353,703391,083519,982549,006416,870566,608Three Wheelers356,223374,445434,423556,126500,660497,020619,093Two Wheelers5,622,7416,529,8297,608,6978,466,6668,026,6818,419,79210,512,889Grand Total7,243,5648,467,8539,743,50311,087,99710,853,93011,172,27514,049,830

Automobile Domestic Sales Trends(Number of Vehicles)Category2003-042004-052005-062006-072007-082008-092009-10Passenger Vehicles902,0961,061,5721,143,0761,379,9791,549,8821,552,7031,949,776Commercial Vehicles260,114318,430351,041467,765490,494384,194531,395Three Wheelers284,078307,862359,920403,910364,781349,727440,368Two Wheelers5,364,2496,209,7657,052,3917,872,3347,249,2787,437,6199,371,231Grand Total6,810,5377,897,6298,906,42810,123,9889,654,4359,724,24312,292,770

Automobile Exports Trends(Number of Vehicles)Category2003-042004-052005-062006-072007-082008-092009-10Passenger Vehicles129,291166,402175,572198,452218,401335,729446,146Commercial Vehicles17,43229,94040,60049,53758,99442,62545,007Three Wheelers68,14466,79576,881143,896141,225148,066173,282Two Wheelers265,052366,407513,169619,644819,7131,004,1741,140,184Grand Total479,919629,544806,2221,011,5291,238,3331,530,5941,804,619