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4%
Third-largest automobile
industry by 2016E
2010
2020
CAGR: 11%
34.0
15.9
FY13
FY20
Two wheelers (million units)
8.6
CAGR: 13%
FY13
FY21
Growing
Growing demand
demand
FY10
Market
size:
USD57.7
billion
Innovation opportunities
FY16E
Market
size:
USD145
billion
Advantage
India
Policy support
Rising investments
20.7 million
units (FY13)
11 million
units (2007)
0.6 million
units (1992)
2008 onwards
19932007
0.4 million
units (1982)
198392
Before 1982
Closed market
Five players
Long waiting
periods and
outdated models
Sellers market
Sector de-licensed in
1993
Major original
equipment
manufacturers (OEMs)
started assembly
operations in India
Imports permitted from
April 2001
Introduction of valueadded tax in 2005
Source: Tata Motors, Society of Indian Automobile Manufacturers (SIAM), Aranca Research
Note: JV Joint Venture
Automobiles
Two-wheelers
Mopeds
Scooters
Passenger vehicles
Passenger cars
Commercial vehicles
Light
commercial
vehicles
Utility vehicles
Electric twowheelers
Multi-purpose
vehicles
Passenger carriers
Goods carriers
Medium
and heavy
commercial
vehicles
Motorcycles
Three-wheelers
The gross turnover of automobile manufacturers in India expanded at a CAGR of 17.7 per cent over FY07-11
Excluding three wheelers, trucks accounted for the largest share of revenues (47.8 per cent in 2011)
58.6
20.4%
CAGR: 17.7%
Trucks
43.3
36.6
33.3
30.5
47.8%
31.8%
FY07
FY08
FY09
FY10
Cars
Two Wheelers
FY11
8.4
Passenger Vehicle
FY11
Commercial Vehicle
Three Wheelers
3.2
FY12
0.8
0.8
FY10
0.8
0.8
FY09
0.8
0.8
3.1
3.0
0.6
0.6
FY08
2.4
1.6
0.6
0.5
FY07
1.8
1.3
0.5
0.6
FY06
0.4
0.5
0.4
0.4
FY05
1.3
0.4
0.4
1.2
6.5
7.6
8.5
10.5
13.4
15.5
15.9
FY13
Two Wheelers
4% 4%
Two Wheelers
15%
Passenger Vehicle
Commercial
Vehicle
77%
Three Wheelers
19.3%
29.4%
Passenger cars
LCV
Utility vehicle
70.6%
80.7%
15.3%
18.3%
5.9%
Mopeds
Goods Carrier
Motorcycles
Passenger carrier
Scooters
81.7%
78.7%
Automobile export volumes increased at a CAGR of 19.1 per cent over FY0513
Two-wheeler segment reported the fastest growth (22.2 per cent) followed by three-wheelers (16.3 per cent) over FY0513
Passenger Vehicle
2.0
0.1
0.1
0.1
0.3
0.4
0.5
0.5
0.0
0.2
0.0
0.2
0.3
0.5
0.5
0.1
0.1
FY07
0.2
FY06
0.2
0.2
0.0
0.1
FY05
0.1
0.1
0.2
0.0
0.1
0.3
0.4
0.5
0.6
0.8
1.0
1.1
1.5
2.0
FY08
FY09
FY10
FY11
FY12
FY13
Commercial Vehicle
Three Wheelers
Two Wheelers
Passenger Vehicle
19%
3%
Commercial
Vehicle
11%
Three Wheelers
67%
Two Wheelers
28%
27%
12%
8%
3%
4%
FY09
FY10
FY11
FY12
FY13
FY14E
FY10
FY11
FY13
7%
9%
5%
8%
FY12
3%
2%
-2%
5%
FY09
3%
0%
0%
0%
16%
33%
28%
20%
25%
33%
5%
13%
50%
25%
33%
FY14E
-33%
Passenger Vehicle
Commercial Vehicle
Three Wheelers
Two Wheelers
9.0
CAGR: 16%
5.0
3.2
FY13
FY15
FY20
Passenger vehicles (million units)
CAGR: 16%
0.8
FY13
1.4
FY15
FY20
Commercial vehicles (million units)
CAGR: 9%
16.8
FY13
2.2
30.0
22.0
FY15
FY20
Two & three wheelers (million units)
Source: SIAM, Vision 2020, Aranca Research
Scenario
The Indian luxury car market expanded at a CAGR of 30 per cent, with 23,000 units
in 2011 (about 1 per cent of the passenger vehicle market in India). The market is
dominated by players such as BMW, Mercedes, Audi, Jaguar
Key drivers
India has the worlds 12th-largest HNI population, with a growth of 20.8 per cent
(highest among the top 12 countries)
With expansion in the education and realty sectors, and increasing wealth of IT
professionals, more consumers aspire to own luxury cars
Notable
Trends
The Indian luxury car market is estimated to expand at a CAGR of 25 per cent during
201220 and reach 150,000 units by 2020 (accounting for 4 per cent of the estimated
6.8-million-unit domestic car market)
The luxury SUV segment is growing at about 50 per cent, while luxury sedans are
increasing 2530 per cent
Source: World Wealth Report (2011) of Merrill Lynch Wealth Management and Capgemini, Aranca Research
Note: HNI - High Networth Individuals
The automotives industry is concentrated with leaders in each segment commanding a share of over 40 per cent
Market leader
Others
Passenger vehicles
45%
20%
10%
4%
63%
23%
7%
LCVs
59%
30%
4%
Three wheelers
41%
40%
10%
Motorcycles
59%
24%
7%
6%
Scooters
51%
21%
14%
10%
4%
Improving productdevelopment
capabilities
Large number of products available to consumers across various segments; this has
gathered pace with the entry of a number of foreign players
Reduced overall product lifecycle have forced players to employ quick product launches
Increasing R&D investments from both the government and the private sector
Private sector innovation has been a key determinant of growth in the sector; two good
examples are Tata Nano and Tata Pixel; while the former has been a success in India, the
latter is intended for foreign markets
Alternative fuels
In FY11, the CNG market was worth more than USD330 million; CNG cars and taxis are
expected to register a CAGR of 28 per cent over FY11FY14
The CNG distribution network in India is expected to increase to 250 cities by 2018 from
30 cities in 2009
Carmakers such as BMW, Audi, Toyota, Skoda, Volkswagen and Mercedes-Benz have
started providing customised finance to customers through NBFCs
Major MNC and Indian corporate houses are moving towards taking cars on operating
lease instead of buying them
Growing demand
demand
Growing
Increasing
investments
Policy
support
Strong
government
support
Rising
investments from
domestic and
foreign players
Goal of
establishing India
as an automanufacturing hub
Rising income,
young population
Inviting
Resulting in
Greater
availability of
credit and
financing options
Greater product
innovation; market
segmentation
Strong growth in
exports
Demand projected
to remain strong,
making returns
attractive
Million Household,100%
222
273
26
50
322
15
32
40
29
35
25
12
1
2008
6
3
2020
17
7
2030
Globals (>18412.8)
Strivers (9206.4-18412.8)
Aspirers (1657-3682.5)
Deprived (<1657)
12.9
11.7
9.3
7.7
2.5
1.5
2.6
2.7
1.9
FY09
FY10
FY11
FY12
FY13
Car industry sales volume (mn)
Car finance industry (USD bn)
Design and
engineering skills
Manufacturing
skills
Manpower
costs
Supplier
base
Raw
materials
Korea
China
East Asia
Thailand
Indonesia
Vietnam
Czech Republic
Romania
Poland
Slovakia
Russia
Hungary
Turkey
Brazil
Latin America
Mexico
Automatic approval for foreign equity investment up to 100 per cent; no minimum
investment criteria
Encourage R&D by offering rebates on R&D expenditure
AMPs vision is to make India a preferred destination for designing and manufacturing of
automobiles and achieve a market size of USD154 billion by 2016
Setting up of a technology modernisation fund focussed on SMEs
Establishment of automotive training institutes, auto design centres and special auto parks
Automotive Mission
Plan (AMP) 200616
NATRiPs
Dept. of Heavy
Industries & Public
Enterprises
Set up at a total cost of USD388.5 million to enable the industry to be on par with global
standards
Nine R&D centres of excellence with focus on low-cost manufacturing and product
development solutions
Worked towards reduction of excise duty on small cars and increase budgetary allocation
for R&D
Weighted increase in R&D expenditure to 200 per cent from 150 per cent (in-house) and
175 per cent from 125 per cent (outsourced)
Proposal to allocate USD2.7 billion for JNNURM to bolster sales volumes of Medium and
Heavy Commercial Vehicles (MHCV)
Notes: SME Small and Medium Enterprises, R&D - Research and Development, NATRiP National Automotive Testing and R&D
Infrastructure Project, AMP - Automotive Mission, JNNURM - Jawaharlal Nehru National Urban Renewal Mission
Business description
Vehicles Research & Development
Establishment (VRDE), Ahmednagar
List of companies
North
DelhiGurgaon
Faridabad
West
MumbaiPune
Nashik
Aurangabad
Kolkata
Jamshedpur
East
Chennai Bengaluru
Hosur
South
Ashok
Leyland
Force
Motors
Piaggio
Swaraj
Mazda
Amtek
Auto
Eicher
Ashok
Leyland
Bajaj Auto
FIAT
GM
M&M
Eicher
Skoda
Bharat
Forge
Tata
Motors
Hindustan
Motors
Simpson
& Co
Internatio
nal Auto
Ashok
Leyland
Ford
M&M
Toyota
Kirloskar
Volvo
Sundaram
Fasteners
Enfield
Honda
SIEL
Maruti
Suzuki
Tata
Tata
Motors
Volkswag
en
Renault-
Motors
Bajaj Auto
Hero
Group
Nissan
M&M
Forgings
JMT
Exide
Hyundai
BMW
Bosch
TVS
Motor
Company
RenaultNissan
FDI inflows in the automotives sector aggregated USD8.3 billion (4.3 per cent of the total FDI) over April 2000 March
2013
DelhiGurgaon
Faridabad
1.3
1.2
1.2
0.9
Ahmedabad
MumbaiPune
Nashik
Aurangabad
Kolkata
Jamshedpur
FY09
FY10
FY11
FY12
FY13
Chennai Bengaluru
Hosur
Global car majors have been ramping up investments in India to cater to the growing domestic demand. Also, these
manufacturers plan to leverage Indias competitive advantage to set up export-oriented production hubs
Planning to double its current investment level of about USD2.5 billion over the next five years
Aims to raise its market share from 1.5 per cent in FY13 to 10 per cent by FY17
Investing in Chennai and Sanand plants to raise capacity to 0.44 million cars & 0.61 million engines by
FY14
Long term strategy to export 25 per cent of vehicles and to make India compact car global production base
Is in the process of expanding its dealer network from 33 in January 2013 to 50 by 2014 end
Plans to raise the number of car offerings in the sub USD46,000 category
Plans to launch up to eight models over the next 56 years
Aims to invest USD460 million in Rajasthan plant by 2014 to build a new assembly line for cars
This will include a new diesel engine component production and a forging plant
Expects to invest another USD163 million at Bidadi plant near Bengaluru
Plans to increase capacity to 310,000 units by 2013 with an investment of USD187 million
Plans to invest USD552-737 million over the next two to three years to develop new products
Plans to infuse USD46 million to double India capacity to 20,000 vehicles by the end of CY13
Source: Respective Company Websites, News Articles, Aranca Research
Plans to produce
1.7 million cars by
2013
Continuing market
leadership
Accounted for 45
per cent share in
the Indian car
market
Product portfolio
expansion
Increased
productivity
Enhanced R&D
capability
2012
Total sales
crossed 1million
units in FY12
Product portfolio
comprising 16
passenger vehicle
models
Capacity
expansion
Roll-out of peoples
car (Maruti 800)
1983
1994
1997
2011
Roll-out of 10
millionth car
In the process of
establishing
Suzukis largest
R&D facility
outside Japan
1994
Production of
1 millionth car
2001
2004
2006
Plans to setup
two facilities
in Gujarat
2007
2008
2009
2010
2011
2012
2013
Disruptive innovation
Production of
first
indigenously
designed LCV
JV with
Daimler AG
Market expansion
Launch of the
first
indigenous
CV
Product portfolio
expansion
Establishment
of Tata
Engineering &
Locomotives
Introduction
of
Megapixel,
an electric
vehicle
Acquisition
of Jaguar
and
Landrover
Launched
Indica, India's
first fully
indigenous
passenger car
Enhancing
R&D capability
Acquisitions
Acquired
stake in
Hipo
Carrocera
SA
Launched
Tata Nano
Joint ventures
1945
1954
1961
1977
1982
1986
1991
1998
2005
2008
2010
2012
74,527
FY11
FY12
73,848
Nano was the only petrol car among the top-selling cars of
2012 to post a positive yoy growth. Tata adopted a different
marketing pitch and launched the 2012 Tata Nano, which
offered a lot of new features for no extra charge
30,763
FY10
FY13
Sales
563
483
377
231 230
8MFY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
145 149
FY06
117
FY05
87
FY04
65
FY03
331
298
178
FY02
CAGR: 22%
Year
Year
2004-05
44.95
2005
45.55
2005-06
44.28
2006
44.34
2006-07
45.28
2007
39.45
2007-08
40.24
2008
49.21
2008-09
45.91
2009
46.76
2009-10
47.41
2010
45.32
2010-11
45.57
2011
45.64
2011-12
47.94
2012
54.69
2012-13
54.31
2013
54.45
India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared
This presentation is for information purposes only. While due care has been taken during the compilation of this
presentation to ensure that the information is accurate to the best of Aranca and IBEFs knowledge and belief, the
content is not to be construed in any manner whatsoever as a substitute for professional advice.
Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in
this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of