Motor Vehicle Production

1950-2013

India
World

Indian Auto Industry

Facts
Second Largest two wheeler
manufacturer in the world
Largest tractor and three
wheeler manufacturers in the
world
Fourth largest Commercial
vehicle market in the world
Eleventh largest passenger car
market in the world

Trends
Growth of exports of 33.57 %
FY 2011-12.
Output of commercial vehicles
has grown 2.8 times compared
to the 2.2 times increase in
passenger cars
For every passenger car turned
out, there are almost 7 twowheelers produced

two wheeler market

9%
16%

car markwet

75%

other vehicles

Growth Potential
Can become Worlds third
largest automobile market in
2030.
By 2016, Automotive sector can
DOUBLE its percentage
contribution to GDP from current
levels of 5% (US$50 billion) to
10% ($180 billion).

The Growth Journey

Pre 1983
Closed market
Growth of market limited by
supply
Outdated models
Players
Hindustan Motors
Premier
Telco
Ashok Leyland
Mahindra & Mahindra

1983-1993

1993-2012

Japanisation - GOI- Suzuki joint

venture to form Maruti Udyog
Joint ventures with companies in
commercial vehicles and
components
Players
Maruti Udyog
Hindustan Motors
Premier
Telco
Ashok Leyland
Mahindra & Mahindra

Delicensing of sector in 1993

Global major OEMs start
assembly in India (Toyota, GM,
Ford, Honda, Hyundai)
Imports allowed from April
2001; alignment of duty on
components and parts to ASEAN
levels
Implementation of VAT

Era of globalization and

evolution of India as a
global
manufacturing hub

Automotive Companies in
India
Major Indian Companies
Major Multi-national companies

Booming Indian Economy

Key Growth Drivers

Auto Industry Numbers

Overall Market
Over all Production increased to 14.82 million vehicles in 2010-11
from 11.17 million vehicles in 2009-10
Passenger vehicles increased marginally from 1.95 million from
1.83 million
Two-wheelers increased from 9.11 million to 9.51 million

Domestic Market
Vehicles sold including PV,CV 2W and 3W in 2008-09 was 9.72
million as compared to 9.65 million in 2007-08.

Exports
Sales was 1.53 million units in 2008-09
As per the Automotive Mission Plan (AMP) 2006-2016 total turnover
of the automotive industry in India would be in the order of US$
122 billion-159 billion in 2016

Category wise numbers

Dominated by Motorcycles 80% , Scooters 14% Mopeds 6%
Domestic - 7.25mn units . Hero mocorp.35% & Bajaj 32%

Two Wheeler

share

CAGR 9.5%

Exports 819000 units (07-08) . Bajaj Auto 59% TVS 17%

share
CAGR 41%
Dominated by Cars 78% , MUV/SUV 22%

Passenger Vehicles

Domestic 1.5mn units Maruti-46% Tata-15%

Hyundai 14%

CAGR -14.8%
Exports - 217000 units (07-08) Maruti 66% Hyundai 24%
CAGR
26% Goods 48% Passenger 38% , Rest by
Dominated
by M&HCV

Commercial Vehicles

LCV -14%
Domestic 487 thousand units , Tata-62% Ashok Leyland -15%
CAGR- 22%
Exports 59
units,
Tatawith
67%64%
Ashok
Leyland
12%
Dominated
bythousand
Passenger
Carriers
share
, Goods

Three Wheeler

CAGR -30.6%
Carrier -36%
Domestic 365 thousand units , Bajaj -42% Piaggio-41%
CAGR- 10.5%
Export 141 thousand units , Bajaj -97%

Production data

The Indian Auto Components Market

Original Equipment Manufacturers (OEMs)
Replacement Parts Production and Distribution : e.g. Air
filters, oil filers and replacement lights
Rubber Fabrication : tyres, hoses, belts etc.
Estimated component market size is US$ 8.7 bn
The exports of auto components industry has grown at a rate
of nearly 30 per cent CAGR over the last four years.

Second Hand Automobile Market

Used car market demand : 1.4 million cars annually
Market Structure :
Organized : 10%
Unorganized : 90%
Vendor Based 30%
Direct Dealings 70%
Certified used car dealers in India are Maruti TrueValue, Honda Auto Terrace, Ford Assured, Toyota U
Trust, Hyundai Advantage, Mahindra and Mahindras First Choice, General Motors - Chevrolet-OK
Unorganized market lacks services like -warranties, OEM equipments, insurance and taxes
Second hand market expected to grow at 12-15 per cent in the next five years to touch a robust 2.5 million
units and a turnover of Rs 50 thousand crore
Estimations are that 50 percent of the used cars sales will be brought under organized car market by 2013

Economic Factors
1
1 year
year
Increased
access to credit
and
lower
interest loans

1-5 year

5-10 years

Investment
in
Infrastructure
spending
can
boost
the
commercial
vehicles
segment.

Growing
working
population (441
million people in
2015/16)
Upward migration of
household income levels
(600 million people have
annual income of more
than $10,200)
Middle class expanding
by 30 - 40 million every
year

Can propel growth

Economic Factors
11 year
year
Impact of delayed
monsoon (85% of
normal, subsequent
impact
on
paddy
cultivation) on rural
demand.

1-5 year
Non-availability
of
Key raw material
(like Steel) at cheap
price.
Possible increase of
interest rates (by 22.5% BPLR) because
of
planned
government
borrowing.

5-10 years
Non- availability of
supplier base with
demanded capability
(Quality
and
Quantity).
Poor execution of
Infrastructure
investments.
(Construction
of
Highways of 16km
per day against the
target of 32 km per
day)
Increase in crude oil
price($ 35/barrel to $
70/
barrel
in
14
months).

Can Stunt Growth

Social Factors
Rapid Urbanization of semi urban regions
Rising aspirational levels. Improvement in living
standards of middle class
Increased spending on Fashion & lifestyle
comforts.
Seeking Value for money- consumer behavior

Increasing customer emphasis on aesthetics and

comfort.

A perfect marriage of rise in disposable

income and demographic dividend
(From US$ 556 per annum US$ 1150 by
2015)

Technological Factors
Frugal Engineering is the way forward
Upgradeable green cars : Plug and play style engines to replace old ones: the Tata
Nano model
Downsize thecars without losing out on interior space. Lower cost, low fuel
consumption , less material usage and less pollution

Grants and Incentives for R&D work

100% grant for fundamental research, 75% for pre-competitive technology, 50%for
product development
Extension of 150% weighted deduction on R&D expenditure

Developing India as a Testing hub: National Automotive Testing and R&D

Infrastructure Project
Investment of INR 17.18 Billion (about USD 380 million) in setting up, inter alia, independent
automotive testing centers within the three automotive hubs in the country
Setting up of comprehensive Testing and Validation facilities including Field Tracks for Agricultural
Tractors, Trailers, Construction Equipments and various other off-road vehicles at Rae Bareilly in
Northern India

Collaborations and Foreign Tie ups for research and technology transfer
Developing engines for bio-fuels, electric or hybrid vehicles

RATIO ANALYSIS

Net sales

Bajaj Auto

Key Financial Ratios of Bajaj Auto

Key Financial Ratios of

Tata Motors

FUTURE GROWTH
According to the Society of
Indian Automobile
Manufacturers,

Annual vehicle sales are

projected to increase to 5
million by 2015
more than 9 million by
2020.
By 2050, India is
expected to top the world
in car volumes with
approximately 611 million

Break through future trends

India will be a Automotive hub, led by small cars and auto component
domains
Export of automotive components to ASEAN,BRIC,EU and USA for OEMs as
well as Aftermarket
Booming Automobiles (Particularly cars) second sales and remodeling
Increased deployment of IT-enabled Automobile support systems like
.GPS,ABS,ASR and Safety systems
Quality Certification (Deming, Six Sigma,TQM,TS16949) amongst suppliers
have attained critical mass and the entire market will follow to get quality
certifications.
Will be a hub for optimal cost, high quality vehicular testing and terrain
data acquisition services
Alternate fuel (Bio fuel, electricity) and environment friendly green
engines (Bharat emission norms)

References
www.acmainfo.com
www.wikipedia.org
www.siamindia.com
www.ibef.org
Ernst & Young Auto Track
www.economywatch.com
www.business-standard.com
The Economic Times
Hindu Business Line
www.automobileindia.com
automobiles.mapsofindia.com