Study of Macro Economic Factors affecting “Indian Auto Industry”

Prepared by Sanjiv Narula . 06 Feb 2016

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Indian Auto Industry- Among Top 10 in World

Source SIAM

Annual Sales 23,960,940 vehicles

Contribute to

7.1 % of the country's GDP , 49% of Mfg GDP , 26% of Industry GDP

4.3% of overall exports

Employment of 19 million

Generate Revenues of Rs 2.34 Lakh crore

Attracted FDI worth US$ 13.48 billion (April 2000 to June 2015)

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Macro Economic Factors affecting Indian Auto Industry

Indian Auto Industry

Interest Rates

Rising Income Level & Demography

Urbanization

Raw Material Prices

USD Fluctuation

Global Environment(China

Meltdown)

Factors Evaluated

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FY 14-15 FY 15-16 Outlook FY 16

-8

-6

-4

-2

0

2

4

6

8% Growth

Car Motorcycle

Interest Rates and Petrol Prices and Auto Sector

Interest Rates reduced from 10.1 % to 9.70 % and expected to dropEncourages spending on investment Increase the Quantity of goods (Automobile ) Purchased

Global crude prices have fallen Cheaper fuel brings down running costs. Lower running costs imply low cost of ownership. Lower cost of ownership drives sales. Cars become more affordable to run. Also, cheaper fuel implies other commodities are cheaper and disposable

income increases

The Interest Rate Effect

The Wealth Effect

Source SIAM

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Demography Indian Pockets growing Deeper

Source India’s macro-economic outlook 2020

15-19 age band (one tenth of the population) will be a significant segment

Almost half of the population will continue to remain in the age band of 15—44 in the next decade.

2000 2005 2015 2020

Indian Car Buyer Getting Younger Favourable Demographics will boost Auto Sector Growth

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Passenger car penetration

Still Lot of scope of Growth in Indian Car Market 5

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Auto Sector Growth by Women

Scoter Market will witness High Growth due to High demand by Women

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Urbanization Trend of India

Bigger the city, longer the distances per trip Opportunities for Personal vehicles where public transport is inadequate

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13.8617.29 17.29 19.91

23.34 25.72 27.7833.00 36.00

43.00 46.00

10.84 11.9911.1810.29

0

20

40

60

80

100

1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2010 2015 2025 2030

Urbanization and Auto Sector Growth

Bigger the city, longer the distances per trip Longer Distance Trip drives need of Transportation Opportunities for Personal vehicles where public transport is inadequate

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Indian Metro Rail rides on Hero MotoCorpNew Delhi: Jaipal Reddy has hailed Hero Moto Limited for introducing special bike service which would provide last mile transportation solution for Metro rail commuters.

“Metro feeder system buses and autos are inadequate and do not provide the last mile solution to people. But this bike service would be revolutionary in meeting this gap.” said Jaipal Reddy.

Rampant urbanisation, migration of people and cross movement to downtown areas has put a lot of pressure on already choking infrastructure.

These bikes are parked at the station, any person with the UID (Unique identity) that verifies license and mobile commerce account can take the bike and reach his destination. GPS tracker in the bike would let the logistics company to get the bike back to the nearest parking bay which are located all across the city. 8

Focus on the journey, not the destination.

Joy is found not in finishing an activity

but in doing it

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Seeking for your valuable Inputs