Section D Group 10:

Ashish Gautam - 2013PGP078 Jophin George - 2013PGP170 Mukul Kumar Singh - 2013PGP229 Rahul Chohan - 2013PGP301 Shantanu Pramod Awandhe - 2013PGP367 Sunit Nanda - 2013PGP412

Automobile Sector
India is the 7th largest Passenger Cars Producers Growth over last 20 years: 1. Protection I Phase till mid80s 2. Liberalization II Phase post 1990 3. Globalization III Phase early 2000
Contributes about 4% in Indias GDP
5% in Indias industrial production Generated about 4.5 lakh of direct employment About 1 crore of indirect employment

Industry Overview
The passenger cars segment 78% of domestic four wheelers sales during FY2009-13 Growth rate 2.2 % during FY2013 Domestic passenger vehicle sales are expected to increase 3-5% during FY2014 Indias passenger vehicle exports increased at 9.0% (YoY) aggregating to 0.5 million units during FY2013 Expected to grow by 10-12 per cent in 2013-14 Total passenger vehicle sales volume showed reduced growth of -6.7% during FY2013 Passenger vehicle penetration levels are low at around 4.7%

Major Automobile Players in India

Tata Motors Market share of 11.7% The company offers products in the compact, midsize, and utility vehicle categories The company has entered into joint ventures with a number of foreign car manufacturers such as Fiat and Daewoo Since 1954, the company has manufactured and sold more than 4 million cars in India Some of the well-known cars manufactured by Tata Motors are: Tata Indica, Tata Indigo, Tata Indigo Marina, Tata Sumo and Tata safari. Management Senior Vice President: Ankush Arora CFO & President: C Ramakrishnan Chairman & Non-Executive Director: Cyrus P Mistry

Maruti Suzuki Market share of 39.12% Biggest passenger vehicle company in India Holds more than 45% of the market share of the domestic vehicle market in India Maruti is headquartered in New Delhi Some of Maruti's most popular cars are: Maruti 800, Alto, Omni, Gypsy, Zen, Wagon R, Versa, Esteem, Baleno and Swift Management Chairman: R C Bhargava Managing Director & CEO: Kenichi Ayukawa Managing Director: Toshiaki Hasuike

Mahindra and Mahindra Market share of 11.56% Presence all over the world majorly in China, UK and U.S.A Mahindra and Mahindra is partners with two of the international companies: Renault SA of France and International Truck and Engine Corporation of U.S.A The company entered the passenger car market quite later with Logan in April 2007 The company has also entered into a joint venture with Ford named Ford India Private Limited on built passenger cars Mahindra and Mahindra also have a controlling stake in Mahindra Reva an electric car Management Chairman & Managing Director: Anand G Mahindra Executive Director: Bharat Doshi

Industry scenario in India

High inflation and slowing economy Decrease in disposable income Petrol prices increased substantially

Deferment of purchases and shift in demand to diesel vehicles

Increase in interest rates

Opportunities & Risks

Opportunities: Infrastructure Growth Rural market penetration Exports from India Risks: Deterioration in economic conditions Interest rates and other inflationary trends Input Costs / Supplies Environmental Regulations Intensifying Competition Changes in tax, tariff or fiscal policies and regulations

Key Govt. Policy Changes

Before 1990s: Low volumes, obsolete tech, no govt. attn. Reforms in 91 tax reliefs, cut in export tariffs Equity regulation and banking reforms Emission norms Mid 90s Opened up for foreign investments - 96 Ford, GM, Toyota etc competitive landscape Fuel specifications

Key Govt. Policy Changes (contd)

Auto Policy 2002 For global competence, and increased contribution to GDP Automatic approval for 100% Foreign Investments Huge incentives for R&D Fuelled modernization of Auto Industry in India Recent trends Fuel subsidy, auto hubs & tax free exports!!

Compliance to Global norms - Harmonization Globalization of Auto Industry GOI to align Indian norms with International regulations

Competition from foreign players

Toyota, Ford, and General Motors have started penetrating the

small cars segment recognising the potential in this segment. Major international players are now developing models specifically to meet Indian consumers preferences and market conditions The new models have been priced at fairly aggressive price and as new entrants ramp up their volumes small car segment will face more competition. Many global players are setting up capacities to locally develop engines and transmissions in India with vendor development in India forming a key part of their strategy

Growth in Passenger Car Segment

Source: Automobile Consulting Group- Passenger Vehicle Analysis Fiscal Year 2012-13

Growth in Passenger Car Segment over the years

Source: RBSA Advisors- Synopsis of Indias Automobile Sector FY 2012 13

Contd.

Source : SIAM, ICRA Estimates

Union Budget (2013-2014) affecting automobile industry:

All small cars-12 % excise duty (unchanged) Concession for specified parts of electric and hybrid vehicles extended up to 31 March 2015 Excise duty on SUVs increased from 27 to 30 percent. (Exception SUVs registered as taxies) A 25 per cent hike in import duty for Completely Build Units (CBUs) No increase in the service tax Import duty on luxury cars increased from 75% to 100%

Impact
Demand for SUVs will get affected High import duty will boost domestic production of cars

Rising costs of parts will lead to increase in car prices

Boost to Electric and hybrid cars

References
http://autobei.com/blog/passenger-vehicle-analysis-fiscal-year-

2012-13/
http://www.siamindia.com/upload/SIAM-Forecasts.pdf http://www.etintelligence.com/etig/researchchannels/sectors/au

toReport.jsp
http://www.researchandmarkets.com/reports/1191955/ https://www.crisilresearch.com/industryasync.jspx?serviceId=7

&State=null#storyId#28179#sectionId#2594#newsFeedId#und efined