Analysis of Macro-environmental factors
for Automobile Industry
Automobile: An automobile or motor car is a wheeled motor vehicle for
transporting passengers; which also carries its own engine or motor.
History:
•Introduced to India in the late 1890’s and the manufacturing industry only took off after independence in 1947. •Introduced to India in the late 1890’s and the manufacturing industry only took off after independence in 1947.
•The protectionist economic policies of the government gave rise in the 1950's to the Hindustan Motors Ambassador.
•Hindustan Motors and a few smaller manufacturers such as Premier Automobiles, Tata Motors, Bajaj Auto, Ashok and Standard Motors held an oligopoly until India's initial economic opening in the 1980's.
•The maverick Indian politician Sanjay Gandhi championed the need for a "people's car"; the project was realized after his death with the launch of "people's car"; the project was realized after his death with the launch of a state-owned firm Maruti Udyog which quickly gained over 50% market share.
•Tata Motors exported buses and trucks to niche markets in the developing world.
AUTOMOBILE
2 WHEELER 3 WHEELER PASSENGER VEHICLECOMMERCIAL
VEHICLE2 WHEELER 3 WHEELER PASSENGER VEHICLE
VEHICLE
L.C.V. I.C.V. H.C.V.
MOTORCYCLE SCOOTERS SCOOTERETTES MOPEDS
Overview of Automobile Industry
• The industry has grown at over CAGR of 14% p.a over the last 5 years.
• In the year 2006-07, sales (domestic as well as exports) of the Indian automotive • In the year 2006-07, sales (domestic as well as exports) of the Indian automotive
industry crossed the historic landmark of 10 million units.
•With the potential to emerge as one of the largest in the world. Presently, India is
•2nd largest two wheeler market in the world
•13th largest commercial vehicle market in the world
•11th largest passenger car market in the world and is expected to be the 7th largest market by 2016 .market by 2016 .
• The industry has emerged as a key contributor to the Indian economy.
• The Indian automotive industry is highly competitive with a number of global and
Indian companies present in the market.
Automotive sales for 2002-07
Sales(Million units)Sales in
units
(2006-07)
Share
in
Total
CAGR
(2002-
07)
6.25
7.29
8.53
9.71
11.12
2003
2004
2005
2006
2007(2006-07) Total
Sales
07)
Two Wheelers 8,476,686 76.2% 14.5%
Passenger Cars 1,578,176 14.2% 16.7%
Three-Wheelers 547,805 4.9% 20.5%
5.41
6.25
0 5 10 15
2002
2003
Commercial
Vehicles
517,648 4.7% 26.7%
Automotive clusters in India
Delhi-Gurgaon-Noida-
Ghaziabad Ashok Leyland EnfieldNorth / Central South
Major automotive clusters - Mumbai-Pune-
Nasik-Aurangabad (West), Chennai -
Bangalore-Hosur (South) and Delhi-Gurgaon-
Faridabad (North)
Ghaziabad
Kolkata
Mumbai-Pune-Nasik
Aurangabad
Jamshedpur
Rajkot-Halol
Hyderabad
Ludhiana Haridwar
Pitampur
Ashok Leyland Enfield
Ford Greaves
Hindustan Motors Hyundai
M & M Tata
Toyota Kirloskar TVS Motors
Volvo
Ashok Leyland Eicher
Force Motors Hero Honda
Hindustan Motors Honda
Honda SIEL ICML
Kinetic LML
Majestic Maruti Suzuki
Piaggio Yamaha
Swaraj Mazda Tata Motors
Ashok Leyland Bajaj Auto
DaimlerChrysler
FIAT Force Motors
West
Hindustan Motors
Tata Motors
East
Aurangabad
Chennai Bangalore Hosur
Hyderabad FIAT Force Motors
GM Greaves Kinetic
M & M Premier
Skoda Tata Motors
Tata Motors
Source: SIAM, IMaCS analysis
Overview of Passenger Vehicles Market
• Indian Passenger vehicle Industry has grown with CAGR of 15.5% from FY’2001-02 to
FY’2006-07.
• Significant increase in competition due to entry of global players.• Significant increase in competition due to entry of global players.
• Shrinking of mini car segment, and increasing share of compact cars in Indian market.
• Impressive growth of executive segment(D), with CAGR of 112% from FY’ 2001-02 to
FY’2006-07
• Indian Passenger vehicle industry is undergoing significant market dispersion.
• Emergence of India as Global manufacturing base for mini and compact cars.
• Exports from passenger vehicle segment has grown significantly, with a CAGR of 30%
from FY’2001-02 to FY’2006-07.
Domestic Passenger Vehicle Industry
Sales Break-up of the Industry by
Segment for 2007
902.1
1061.3
1143.1
1379.1
2004
2005
2006
2007
000 units
22%
Segment for 2007
Passenger
Cars, 78%
SUVs/MUVs, 22%
675.1
707.2
0 500 1000 1500
2002
2003 78%
Segment-wise Analysis of Passenger Vehicle
Market
Segment Description Share
in
2001-02
Share
in
2006-07
CAGR
A Mini cars, up to 3400 mm length 28% 7% -11%
B Compact cars, between
3401-4000 mm length
54% 70% 22%
C Mid size cars between 4001-4500
mm length
17% 18% 18.6%
D Executive cars between 0.2% 3.8% 112%D Executive cars between
4501 - 4700 mm length
0.2% 3.8% 112%
E Premium cars between
4701 - 5000 mm length
0.9% 1.18% 31.1%
F Luxury cars - above 5001 mm
length
0.0% 0.02% NA
Market share of Key Players in
2006-07
Maruti Udyog Ltd. 46%
Segment Key Brands and Companies to which
they Belong
A Maruti 800.
B Alto, Wagon-R, Swift (MSuzuki), Indica (Tata)
Santro, Getz (Hyundai ), Palio (Fiat India)
C Esteem, SX4 (MSuzuki) TATA Indigo,
Verna, Elantra (Hyundai ), Honda City, Astra,
Aveo, Optra (GM), Logan
TATA Motors Ltd. 16%
Hyundai Motor India
Ltd.
14%
Mahindra &
Mahindra Ltd.
7%
Totyota 4%
Aveo, Optra (GM), Logan
(M&M), Icon, Fiesta (Ford ), Cedia (HM), Petra
(Fiat India)
D Civic (Honda), Opel Vectra (GM), Contessa
(HM), Skoda Octavia,
Mercedes C-class (Daimler Chrysler India)
E Sonata (Hyundai Motors),Honda Accord ,Corolla,
Camry (Toyota Kirloskar), Mondeo, Superb
(Skoda Auto), Mercedes E-class, 5 series (BMW
India)Totyota 4%
Others 13%
F Mercedes S-class, Maybach (DaimlerChrysler),
BMW 7 Series
SUV Grand Vitara (MSuzuki),Safari (Tata),
Tucsan (Hyundai Motors), CRV (Honda),
Scorpio, C-fusion, Endeavour (Ford),
MUV Omni, Versa (MSuzuki), Sumo, Indigo Marina
(Tata), Innova,Tavera, Bolero (M&M)
Indian Passenger Vehicle Market – Competitive Scenario
Passenger
Cars 46% 16% 14% 7% 4% - - - - - - - -
Utility
Vehicles 2% 18% 1% 42% 21% 1% 10% 1% <1% - 4% - %
Multi
Purpose
Vehicles40% - - - - - - - - - - - -
4th largest Passenger Vehicle
Market in World
Overview of Two-wheeler and CVs Market• The total sales of the Indian two wheeler industry has grown at a CAGR of 14.5 per cent
between FY’2001-02 and FY’2006-07.
• The motorcycles market had witnessed the fastest growth rate in the two wheeler segment, with a CAGR of 19.2%.
• Indian Two-wheeler market is characterized with intense competition with around 10 major players.
• Exports from two-wheeler industry has increased with a CAGR of 42.8%, from FY’2001-02 to FY’2006-07.
• The total sales of the Indian Commercial vehicles industry has grown at a CAGR of 26.1% between FY’2001-02 and FY’2006-07.26.1% between FY’2001-02 and FY’2006-07.
• With increased industrial production and investments in real estate CVs market has witnessed good growth.
• CV exports has grown from 12000 units in FY’2001-02 to 50,000 units in FY’2006-07, showing a CAGR of 33.2%.
Segment-wise Analysis of Indian Two Wheeler
Market
Segment Description Share in 2001-02 Share in 2006-07 CAGR
A1 Scooter with engine 5% 0% -33.9%A1 Scooter with engine
capacity less than 75 cc5% 0% -33.9%
A2 Scooter with engine
Capacity ,75-125 cc 5% 10% 32.9%
A3 Scooter with engine
capacity between
125-250 cc
12% 1% -27.7%
B2 Motorcycle with engine
capacity between
75-125 cc
62% 66% 14.9%
B3 Motorcycle with engine 5% 17% 44.8%B3 Motorcycle with engine
capacity between
125-250 cc
5% 17% 44.8%
B4 Motorcycle with engine
capacity above 250 cc1% 1% 5.7%
C1 Mopeds 10% 5% -2.7%
Segment-wise Analysis of Indian CVs Market
Description (by Gross
Vehicle Weight)Share in 2001-02 Share in 2006-07 CAGR
Up to 3.5 tonnes
(Pickups)
15% 36% 51.9%
(Pickups)
5 - 7.5 tonnes (LCV) 25% 9% 5.1%
7.5 – 12 tonnes
(Intermediate CV)
7% 9% 33.4%
12 – 16 tonnes( 4X2 29% 17% 14.6%12 – 16 tonnes( 4X2
FF/SF)
29% 17% 14.6%
16 – 25 tonnes
(Multi Axles)
8% 21% 55.9%
25 tonnes and above
(Tractor Trailers)
8% 21% 9.7%
Market share of key players in 2006-07
Market Share of key Players in Two-
wheeler Industry
Hero Honda 42%
• Market Share of key
Players in Two-wheeler
Market Share of Key Players in CVs
Industry
Hero Honda 42%
Bajaj Motors 27%
TVS Motor co. 19%
HMSIL 9%
Players in Two-wheeler
IndustryTATA Motors 64%
Ashok Leyland 16%
M&M Ltd. 10%
Eicher Motors Ltd. 6%HMSIL 9%
Others 3%
Eicher Motors Ltd. 6%
Others 4%
Indian 2-Wheeler Market
Competitive Scenario
Motorcycle 42% 27% 19% - - - - - -
- 15% 28% - 2% 46% 9% <1% -
- - 82% - - - 8% 10% -- - 82% - - - 8% 10% -
India is now the second largest
two-wheeler market in the
world
Economic Environment
• The Indian economy has grown at 8.5 per cent per annum.
• The manufacturing sector has grown at 8–10 per cent per annum in the • The manufacturing sector has grown at 8–10 per cent per annum in the
last few years.
• More than 90 per cent of the CV purchase is on credit.
• Finance availability to CV buyers has grown in scope during the last few
years.
• The increased enforcement of overloading restrictions has also
contributed to an increase in the number of CVs plying on Indian roads.
• Several Indian firms have partnered with global players. While some have • Several Indian firms have partnered with global players. While some have
formed joint ventures with equity participation, others have entered into
technology tie-ups.
• Establishment of India as a Manufacturing hub, for mini, compact
cars, OEMs, and for auto components.
� Increasing disposable incomes
� Rising aspirational levels
� Market evolution from Mini cars
to Hatchbacks to Compact Sedans
Key Market Drivers Key Trends
� Low interest rates.Wide variety and easy availability of Financing options.
� High sensitivity to Fuel prices
� Lack of urban & rural public
now evident
� Increasing customer emphasis on
aesthetics and comfort.
� Lack of urban & rural public transportation infrastructure
� Flourishing Service Sector� Shrinking product life-cycles
Pre 1983 1983-1993 1993-2007
• Closed market
• Growth of market
• Suzuki, Japan and GOI joint
venture to form
• Delicencing of the sector in 1993
• Global major OEMs start
Indian Automotive Industry – Development and
Growth
• Growth of market
limited by supply
• Outdated models
venture to form
Maruti Udyog
• Joint ventures with
companies in commercial
vehicles and components
• Global major OEMs start
assembly in India
(GM, Ford, Honda, Hyundai, etc.)
• Imports allowed from April 2001;
alignment of duty on components
and parts to ASEAN levels.
• Easy auto finances.
• Implementation of VAT.
Players Players PlayersPlayers
• Hindustan Motors
• Premier
• Telco
• Ashok Leyland
• Mahindra & Mahindra
Players
• Maruti Udyog
• Hindustan Motors
• Premier
• Telco
• Ashok Leyland
• Mahindra & Mahindra
Players
• Entry of Global players
• Indian government auto policy aimed at promoting an integrated, phased and
conducive growth of the Indian automotive industry.
• Allowing automatic approval for foreign equity investment up to 100 per cent, with
Current Political Environment
no minimum investment criteria.
• Establish an international hub for manufacturing small, affordable passenger cars
as well as tractors and two wheelers.
• Ensure a balanced transition to open trade at minimal risk to the Indian economy
and local industry.
• Assist development of vehicles propelled by alternate energy sources.
• Laying emphasis on R&D activities carried out by companies in India by giving a
weighted tax deduction of up to 150 per cent for in-house research and R&D weighted tax deduction of up to 150 per cent for in-house research and R&D
activities.
• Plan to have a terminal life policy for CV along with incentives for replacement for
such vehicles.
• Promoting multi-modal transportation and the implementation of mass rapid
transport systems.
Social Environment
• Growth in urbanization, 4th largest economy by PPP index.
• Upward migration of household income levels.
• Increase in PPP , led to the increase in market share of compact cars.
• 85% of Cars are financed in India (15% in China).
• Cars priced below USD 12000 account for nearly 80% of the market.
• Vehicles priced between USD 7000 –12000 form the largest segment in the
passenger car market.
• Indian customers are highly discerning, educated and well informed. They are
price sensitive and put a lot of emphasis on value for money.
• Preference for small and compact cars. They are socially acceptable, even amongst • Preference for small and compact cars. They are socially acceptable, even amongst
the well-off.
• Preference for fuel efficient cars with low running costs. The Tata Indica has the
lowest running cost at US 8.5 cents per mile.
Technological Environment
• With the entry of global companies into the indian market, advanced technologies ,both in product and production processes have developed.
• With the development or evolution of alternate fuels, hybrid cars have made entry into the market.
• Few global companies have setup their R&D centres in India.
• Major global players like audi, BMW,Hyundai etc have setup their manufacturing units in India.
• Government initiatives regarding tax rebates has led to global players setting up their R&D centres in India.
• Govt. initiatives in establishing NATRIP network across the country will further lead to enhancing R&D and technological advancements.
New testing &
homologation center at
MANESAR
New testing center for
tractors & off-road
vehicles, accident data
analysis and specialised
driving training at RAE
BAREILLYHill Area driving
training center and
Regional In-Use
vehicle
management center
at SILCHAR
NATRIP Network
Up-gradation of VRDE
at AHMEDNAGAR
New complete
proving ground at
INDORE
Up-gradation of
ARAI at PUNE
New test &
homologation center
near CHENNAI
INDORE
Environmental Scenario
Automotive regulations in India
Status of Indian Regulation
Number of regulations
Fully / Partially aligned 43
In process of being aligned 32
Items / Regulations to be covered 39
Total 114
Emission Compliance
C VsTwo WheelersCars
Emission Standards Status
Already introduced
in Metros, Mini-
Metros .
From April 1, 2005
Entire Country
Already introduced
in Metros:Mini-
Metros, from Sept,
2003
Bharat Stage II
C VsTwo WheelersCars
From April 1, 2010From April1, 2008From April 1, 2010Bharat Stage IV
From April 1, 2005From April 1, 2008From April 1, 2005Bharat Stage III
Growth Forecasts as per Automotive Mission
Plan
• The size of the Indian automotive industry is expected to grow at a rate of 13% per
annum over the next decade to reach around 31.96 Mn in 2016 from 11Mn in
2007.2007.
• The total investments required to support the estimated growth are around US$
120-159 billion by 2016.
Vehicle Type Number sold (in million units)
Two wheelers 27.80
Passenger vehicles 2.65Passenger vehicles 2.65
Three wheelers 0.87
CV 0.64
Total 31.96
Thank You
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