An Alternate Approach to NR Demand in India Tyre Industry...
Transcript of An Alternate Approach to NR Demand in India Tyre Industry...
31‐10‐2012
1
An Alternate Approach to NR Demand Estimation in India : Tyre Industry Proposal
Rajiv BudhrajaDirector General
Automotive Tyre Manufacturers’ Association(ATMA)Email: [email protected] ; [email protected] ; Website: www.atmaindia.org
Presented at : International Rubber Conference– 28th Oct’ 2012, Kovalam, Kerala 1
Contents
• Relationship : GDP: Automobile Sector : Tyre Industry & NR Demand
• Brief Overview of Auto Sector
• NR Production and Consumption Trends
• Suggested Model for NR Demand Estimation
2
31‐10‐2012
2
GDP‐Auto Industry –Tyre Industry ‐ Rubber Equation
GDP
AUTOMOBILE INDUSTRY
TYRE INDUSTRY
RUBBER DIRECT & STRONG
CO‐RELATION
3
There exists a close, strong and positive inter‐linkage between GDPGrowth which drives Automobile Sector growth which, in turn, spursvolume growth in Tyre Industry and consumption growth in NaturalRubber.
Linkage between GDP Growth &NR Consumption…. MT(%)
GDP Growth has spurred Automobile & Tyre Production –reflected in NR consumption growth as well ! 4
NR Consumption
4
5.8
3.8
8.5
7.5
9.5 9.69.3
6.8
8
8.5
6.5
5.5
500000
600000
700000
800000
900000
1000000
1100000
2
4
6
8
10
12
1990s 2001‐02 2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 2012‐13
GDP Growth Rate NR Consumption
31‐10‐2012
3
Macroeconomic ScenarioIndia’s GDP Growth rate (%) FY 12‐13
Estimates/Revised Projections
Note: The Month/Year on X‐axis represents the period at which the projection was made. 5
6.5
7.77.9
7.3
6.5
7.5
7.0
5.6
6.7
7.3
4.9
6.5
5.5
6.9
6.5
5.5
4
4.5
5
5.5
6
6.5
7
7.5
8
8.5
9In 2011
Jan'12
Jun'12
Jul'12
Mar'12
Apr'12
Sep'12
Aug '12
May'12
Sep'12
Jun'12
Aug '12
Jun'12
Earlier
Sep'12
GDPGrowthRate FY11‐12
RBI Govt. ofIndia
ADB PMEAC IMF CRISIL WorldBank
S & P
(%)
Revisiting the Automobile Growth Projections (FY12‐13)(As against SIAM Projections (made in Oct’12) ref. column. 4 – ATMA Marketing Group
has given an assessment/estimate ref. column. 5 in Apr’12)
1 2 3 4
S.No
Category
Actual (Production)%YoY
Actual(Production) %YoY
FY 12‐13
Projection (%YoY) ‐ (Sales)
FY 12‐13By SIAM
FY 10‐11 FY 11‐12Over
Apr‐Sep’11(6 mths)
Over FY 11‐12(12 mths)
(Oct’12)
1 Commercial Vehicles (M&HCV) 38% 11% (‐)18% (‐)23%
3‐5%*
2Light Commercial Vehicles (LCV)
31% 27% (‐)5%(‐)1%
3 Passenger Cars 27% 2% (‐)1%
(‐)6%
8‐10%**4 UV/MPV/SUV
25% 15% 31% 25%
5 Scooters43% 25% 21%
11%
5‐7%**6 Motorcycles
24% 14% (‐)0.03%(‐)1%
7 Three Wheelers 29% 10% (‐)15%
(‐)14%0‐2%
8 Tractors****26% 21% (‐)6%
(‐)9%NA
Total (All Vehicles) 27% 14% 2% (‐)1% 5‐7%
*Total CV; ** Total PV; *** Total 2W, **** Apr‐AugSource : SIAM 6
31‐10‐2012
4
CV Production FY 2012‐13 & YoY Comparison‐
38%
11%
‐8%
‐20%
‐10%
0%
10%
20%
30%
40%
50%
2010‐11 2011‐12 2012‐13(Est)
TOTAL31%
27%
2%
0%
5%
10%
15%
20%
25%
30%
35%
2010‐11 2011‐12 2012‐13(Est)
TOTAL
Medium & Heavy Commercial Vehicle (M&HCV)
Light Commercial Vehicles(LCV)
7
Month‐wise Trend in Production of MHCV & LCV(Figs/Nos)
8
4201 4555
2428627505
20196
4514
0
10000
20000
30000
40000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2010‐11 2011‐12 2012‐1
Goods Carriers Passenger Carriers Avg. Monthly/Goods Carrier Avg. Monthly/Passenger Carrier
M&HCV
30746
39676 38666
3751 4240 5107
0
10000
20000
30000
40000
50000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2010‐11 2011‐12 2012‐1
Goods Carriers Passenger Carriers Avg. Monthly/Goods Carrier Avg. Monthly/Passenger Carrier
LCV
31‐10‐2012
5
Passenger Vehicles Production FY 2012‐13 & YoY Comparison
27%
5%
2%
0%
5%
10%
15%
20%
25%
30%TOTAL 27%
2%
‐1%‐5%
0%
5%
10%
15%
20%
25%
30%Passenger Car
17% 19%
58%
0%
10%
20%
30%
40%
50%
60%
70%Utility Vehicles
9
Month‐wise Trend in Production of Passenger Vehicles & Utility Vehicles
(Figs/Nos)
10
203568 209456196525
4423750807
63552
0
50000
100000
150000
200000
250000
300000
AprMay Jun Jul Aug Sep Oct NovDec Jan FebMar AprMay Jun Jul Aug Sep Oct NovDec Jan FebMar AprMay Jun Jul Aug Sep
2010‐11 2011‐12 2012‐1
P. Cars UVs/Vans Avg. Monthly/P. Cars Avg. Monthly/UV & Vans
Passenger Vehicles
31‐10‐2012
6
Segment Wise Tyre Supplies(2000‐01 vs. 2011‐12)
Percentage share of OE (Original Equipment manufacturers) has increased acrossall segments during the last 10 years, often 100% increase from the baselevel.
Developments in the Auto sector will have a direct & immediate impact ontyres, and in turn on NR consumption. 11
73% 68% 63%
34%
62%50%
61%46%
7% 19%17%
42%
37%45%
39%
53%
20%13%
20% 24%
1% 5% 0% 2%
0%
20%
40%
60%
80%
100%
2000‐01 2011‐12 2000‐01 2011‐12 2000‐01 2011‐12 2000‐01 2011‐12
T&B LCV P. Car Motorcycle
Rep Mkt OE Export
• Key NR Trends
• NR Demand Projection –
An Alternate Approach
12
31‐10‐2012
7
NR Production / Consumption Trend (1991‐92 to 2001‐02 )
13
3.67 3.934.35
4.725.07
5.495.84 6.05 6.22 6.30 6.31
3
5
7(Lakh Tonnes)
NR Production Trend(1991‐92 to 2001‐02)
3.804.14
4.504.86
5.255.62 5.72 5.92
6.28 6.31 6.38
3
5
7(Lakh Tonnes)
NR Consumption Trend(1991‐92 to 2001‐02)
11.0%
7.3%
10.6%
8.4%
7.4%
8.4%
6.3%
3.6% 2.8%
1.3% 0.2%0%
5%
10%
15%
(YoY%)
NR Incremental Production Trend(1991‐92 to 2001‐02)
4.0%
8.9% 8.8%
7.9%
8.2%
6.9%
1.8%
3.4%
6.2%
0.5%1.1%
0%
5%
10%
15%(YoY%)
NR Incremental Consumption Trend(1991‐92 to 2001‐02)
NR Production / Consumption Trend (2001‐02 to 2011‐12 )
14
6.31 6.49
7.127.50
8.038.53
8.258.65
8.318.62
8.99
6
8
10
(Lakh Tonnes)
NR Production Trend(2001‐02 to 2011‐12)
6.386.95
7.207.55
8.01 8.208.61 8.72
9.31 9.48 9.64
6
8
10
(Lakh Tonnes)
NR Consumption Trend(2001‐02 to 2011‐12)
0.2%
2.9%
9.6%
5.3%7.1% 6.3%
‐3.2%
4.7%
‐3.8%
3.7%4.3%
‐5%
0%
5%
10%(YoY%)
NR Incremental Production Trend(2001‐02 to 2011‐12)
1.1%
9.0%
3.5%
5.0%6.1%
2.4%
5.0%
1.2%
6.8%
1.8%1.8%0.0%
5.0%
10.0%(YoY%)
NR Incremental Consumption Trend(2001‐02 to 2011‐12)
31‐10‐2012
8
Incremental NR Production / Consumption Trend (1991‐92 to 2012‐13)
‐6
‐4
‐2
0
2
4
6
8
10
12
Incremental Production Incremental Consumption
(%)
Inverse Relationship in Incremental
Growth in recent years
15
Decade of Change(NR Production & Consumption)
16
1999‐00 to 2000‐01:
Production growth > Consumption growth
Production growth : 2.64 Lakh Tonnes / 6.2% (CAGR)
Consumption growth : 2.58 Lakh Tonnes / 5.9% (CAGR)2001‐02 to 2011‐12
Production growth < Consumption growth
Production growth : 2.68 Lakh Tonnes / 4.0% (CAGR)
Consumption growth : 3.26 Lakh Tonnes / 4.7% (CAGR)
2012‐13(Apr‐Sep) over 2011‐12(Apr‐Sep)Production : 3.95 Lakh Tonnes vs 3.91 Lakh Tonnes ie (1.1%)Consumption: 5.01 Lakh Tonnes vs 4.75 Lakh Tonnes ie (5.6%)
31‐10‐2012
9
NR Consumption(Tyre & Non Tyre sectors)
NR consumption in Tyre sector has consistently grown from 48% (less
than half) in 2001‐02 to approx. 65% (approx. 2/3rd) in 2011‐12.17
48%52%
NR Consumption (Tyre vs. Non Tyre) 2001‐02
Tyre Non Tyre
65%
35%
NR Consumption (Tyre vs. Non Tyre) 2011‐12
Tyre Non Tyre
As a result…
• Developments in the tyre sector
• Immediate & direct impact on NR Consumption
Challenge is to
• Assess NR Demand Estimate in a dynamic & volatile economic environment
18
31‐10‐2012
10
19
Current Methodology used by the Rubber Board(for NR Consumption Demand Forecast)
Regression Analysis• Regression analysis is one of the most commonly used statistical techniquesin social and behavioural sciences as well as in physical sciences. Its mainobjective is to explore the relationship between a dependent variable andone or more independent variables (which are also called predictor orexplanatory variables).
Statistical limitations of Regression Analysis:• The estimated parameters and other relationships have a tendency tochange through time. Thus, the relationships between variables foundduring one period may not persist through a future period.
• Key quantitative variables do not always behave in a way that fits neatlyinto a statistical model.
Practical limitations of Regression Analysis:• Regression analysis does not account for a dynamic/ever changingscenario– the current economy (Global and domestic) is dynamic in natureand needs to be dealt differently.
Influencing Factors
For a fair assessment /estimation of NR Consumption, thefollowing factors/drivers need to be analysed and studied (in termsof their linkage/relationship with NR Consumption pattern) :
20
GDP
Auto Sector Growth
Tyre Sector Growth
Non Tyre Sector Growth
China’s GDP
China’s NR Consumption
SR Price Trends
Crude Oil Price
Others (Political, Climatic, etc)
31‐10‐2012
11
NR Consumption Demand Forecast Model(Proposed)
21
Methodology
Demand, irrespective of the size, type or nature of the industry, isdependent on multiple factors / drivers influencing consumerpurchasing behaviour directly / indirectly.
Given the dynamic nature of the Global economy and the everchanging facets of the domestic growth/demand scenario, the NRDemand Forecast model has arrived at a list of carefully chosengrowth drivers, ranked in order of importance, basis which NRconsumption demand forecast for FY 2012‐13 has been calculated.
Each driver, basis its expected performance in FY 2012‐13, hasimpacted growth in “NR consumption” for FY 2012‐13. The impactof each driver has been captured through a point system and thefinal impact on the sector has thereafter been derived.
22
31‐10‐2012
12
Methodology …Contd
Details of the methodology and growth drivers(Ref. NR demand forecast model in slide 14)
Col. III ‐ The identified drivers/factors ranked in order of importance
Col. IV ‐Major economic drivers/factors identified
Col. V – VIII ‐ Each driver projected on y.o.y variations 2012‐13 vs.2011‐12
Col. VIII – XI ‐ Impact on Growth of the segment projected by eachdriver basis the outcome in Col. V – VII
Each driver's impact on growth of the segment is assigned a score* (asper the standard score table)
23
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
Category Segment Driver
Rankings Drivers
FY 2012‐13
YoY Projection ‐ Likely Growth Scenario (based on yoy growth)
Likely Scenario (Dom. NR Demand)
ScoreHigh Normal Low Negative High Normal Low
Demand Projection for Natural Rubber (based on Driver Impact Assessment) : FY 2012‐13
*Negative influence on NR Demand** Negative influence on Global NR Demand. Hence, indirect impact on NR scenario in India
Normal impact on growth (3%‐4%) 24
Projections(Col v - viii) Score
Impact on Growth (Col ix - xi) Score (Col xii)
Growth (linked to Score)
High 5 to 6 High 60 + >4%Normal 3 to 4 Average 50 to 60 3%-4%Low 1 to 2 Marginal 40 to 50 1%-2%Negative (-)2 to 0 Low < 40 Nil/Flat
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
High Normal Low Negative High Normal Low8 GDP Growth 08 Automobile Production 08 China's domestic economy* 08 China's NR Consumption** 67 Synthetic Rubber Price 26 Crude Oil Price 45 Climatic Factors 65 Political / Economic Factors 48 Tyre Production 48 Tyre Exports 68 Tyre Imports* 66 Cycle Tyre & Tubes 65 Auto Components 25 Footwear 45 Belt and Hoses 4
100 54
Category Segment Driver
Rankings Drivers Likely Scenario (Dom. NR Demand)YoY Projection - Likely Growth Scenario (based on yoy growth)
FY 2012-13
Score
Non Tyre Specific
NR
General
Tyre Specific
Est. Growth in NR Consumption in FY‐12‐13 : 4.3%
31‐10‐2012
13
Model Validation(For FY 2000‐01 & FY 2004‐05)
25
Driver(s) 1999‐00 2000‐01 2003‐04 2004‐05
GDP 6% 4% 8.5% 7.5%
Auto Production (Lakh nos) 51.12 49.95 74.20 87.08
China GDP 7.6% 8.4% 10% 10.1%
China NR Consumption (‘000MT) 852 1080 1538 2004
SR PricePBR (Rs./100 Kg)
4460 5403 6056 7413
Crude Oil Price($/bbl)
$22.79 $36.54 $34.60 $45.78
Climatic Factors* Normal Normal Normal Normal
Political/Economic Factors* Normal Normal Normal Normal
Tyre Production (Lakh nos.) 414.15 424.71 546.90 600.82
Tyre Exports (Lakh nos.) 22.01 24.44 41.01 50.67
Tyre Imports* (Lakh nos.) Normal Normal 8.54 12.64
Cycle Tyre & Tube Production* Normal Normal Normal Normal
Auto Components Related to Auto Production
Related to Auto Production
Related to Auto Production
Related to Auto Production
Footwear* Low Low Normal Normal
Belt & Hoses* Low Low Normal Normal
Reference Data
26*Assumed/Estimated in the absence of quantitative info.
31‐10‐2012
14
NR Consumption Trend (INDIA)(2001‐02 vs. 2004‐05)
NR Consumption growth (YoY% change)moved from 0.5% in 2000‐01 to5% in 2004‐05 (a difference of 10 times).
Year NR Consumption (000 MT)
2000‐01 631.45
2001‐02 638.20
2002‐03 695.42
2003‐04 719.60
2004‐05 755.40
27
Demand Projection for Natural Rubber (based on Driver Impact Assessment) : FY 2000‐01
*Negative influence on NR Demand** Negative influence on Global NR Demand. Hence, indirect impact on NR scenario in India Low impact on growth
(Nil/Flat)
Actual NR Consumption growth FY 2000‐01 : 0.5%
28
Projections(Col v - viii) Score
Impact on Growth (Col ix - xi) Score (Col xii)
Growth (linked to Score)
High 5 to 6 High 60 + >4%Normal 3 to 4 Average 50 to 60 3%-4%Low 1 to 2 Marginal 40 to 50 1%-2%Negative (-)2 to 0 Low < 40 Nil/Flat
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
High Normal Low Negative High Normal Low8 GDP Growth 08 Automobile Production 08 China's domestic economy* 48 China's NR Consumption** 27 Synthetic Rubber Price 66 Crude Oil Price 05 Climatic Factors 45 Political / Economic Factors 48 Tyre Production 28 Tyre Exports 68 Tyre Imports* 46 Cycle Tyre & Tubes 25 Auto Components 05 Footwear 25 Belt and Hoses 2
100 38
Category Segment Driver
Rankings Drivers
FY 2000-01YoY Projection - Likely Growth Scenario (based on yoy growth) Likely Scenario (Dom. NR Demand)
Score
NR
General
Tyre Specific
Non Tyre Specific
31‐10‐2012
15
Demand Projection for Natural Rubber (based on Driver Impact Assessment) : FY 2004‐05
*Negative influence on NR Demand** Negative influence on Global NR Demand. Hence, indirect impact on NR scenario in India
High impact on growth (>4%)
Actual NR Consumption growth FY 2004‐05 : 5%
29
Projections(Col v - viii) Score
Impact on Growth (Col ix - xi) Score (Col xii)
Growth (linked to Score)
High 5 to 6 High 60 + >4%Normal 3 to 4 Average 50 to 60 3%-4%Low 1 to 2 Marginal 40 to 50 1%-2%Negative (-)2 to 0 Low < 40 Nil/Flat
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii)
High Normal Low Negative High Normal Low8 GDP Growth 08 Automobile Production 68 China's domestic economy* 48 China's NR Consumption** 27 Synthetic Rubber Price 66 Crude Oil Price 05 Climatic Factors 65 Political / Economic Factors 48 Tyre Production 68 Tyre Exports 68 Tyre Imports* 06 Cycle Tyre & Tubes 65 Auto Components 65 Footwear 45 Belt and Hoses 4
100 60
Category Segment Driver
Rankings Drivers
FY 2004-05YoY Projection - Likely Growth Scenario (based on yoy growth) Likely Scenario (Dom. NR Demand)
Score
NR
General
Tyre Specific
Non Tyre Specific
Thank You!
30
Questions / QueriesEmail: [email protected] ; [email protected]