Automobile Market

8/3/2019 Automobile Market

1/23

AutomotiveSeptember 2006

www.imacs.in


2/23

AUTOMOTIVEwww.imacs.in

Market Overview

Government regulations & policy

India Advantageand business opportunities

Contents


3/23


MarketOverview Market Overview


India Advantage and business opportunities


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Profile: Indian Automotive Industry

Vehicle sales in India in 2005 - 06 ( in mil)

1.14

0.35

7.05

0.36

0 2 4 6 8

Cars CVs Two whee lers Three Wheele rs

The industry has grown at a CAGR of 14% p.a over the last 5 years,

with sales of 9 million vehiclesin 2005-06

With the potential to emerge as one of the largest in the world. Presently, India is

2nd largest two wheeler market in the world

4th largest commercial vehicle market in the world

11th largest passenger car in the world and is expected to be the 7 th largest market by 2016

The industry has emerged as a key contributor to the Indian economy

Source : SIAM

Size of around

US$ 34 billionin 2006

Market Overview


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Auto components industry hasalso grown at a rapid pace ...

Size of Component Industry (US$ mn)

3849 39654470

5430

6730

8700

10000

FY00 FY01 FY02 FY03 FY04 FY05 FY 06

17%

The Indian auto components

industry has grown at 17%

CAGRover the last few years

to reach a size of around

US$ 10 billion in 2005-06

Market breakup: OEM demand

~ 54%, replacement market

~30%, exports ~16%

Source : ACMA

FY refers to Financial Year April to March

Market Overview


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Players: Indian auto industry

Global

OEM

Indian

OEM

IndianSuppliers

GlobalSuppliers

Engineering &Development

Companies

IndianAuto

Industry

GM Toyota Ford Hyundai Maruti Suzuki

Honda Skoda Volvo Mercedes

Tata Motors Mahindra & Mahindra Bajaj Auto TVS Motors Hero Honda

Bajaj Tempo Ashok Leyland

Bharat Forge Sundram Fasteners Rane Group Shriram Pistons

RICO Auto Sono Koyo Steering

Delphi Visteon Bosch Denso

Valeo Thyssen Krupp

The Indian auto industry is highly competitive

with a number of global and Indian auto companies present

Market Overview


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Delhi-Gurgaon-Noida-Ghaziabad

Kolkata

Mumbai-Pune-NasikAurangabad

Jamshedpur

Chennai Bangalore Hosur

Rajkot-Halol

Hyderabad

Ludhiana Haridwar

Pitampur

Automotive clusters in India

Ashok Leyland Enfield

Ford Greaves

Hindustan Motors Hyundai

Mahindra & Mahindra Tatra

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

North / Central

Ashok Leyland Atul Auto

Bajaj Auto Daimler Chrysler

FIAT Force Motors

GM Greaves Kinetic

M & M Premier

Skoda Tata Motors

West

Hindustan Motors

Tata Motors

East

South

Source: SIAM, IMaCS analysis

Major automotive clusters - Mumbai-Pune-Nasik-Aurangabad (West), Chennai -Bangalore-Hosur (South) and

Delhi-Gurgaon-Faridabad (North)

Market Overview


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Exports are rising - India has the potentialto become the global outsourcing hub

Vehicle Exports from India

0

100000

200000

300000

400000

500000

600000

CV Cars 2 Wheelers 3 Wheelers

Units

0

10

20

30

40

50

60

%

Exports (2005-06) Growth rate ( 4 year CAGR)

Indianvehicle exports have grown at a scorchingrate of over 40 % over the last few years, whilecomponent exports have grown at around 25 % per annum. Key exporters include:

Maruti, Tata Motors, M & M and Hyundai for Passenger Cars and MUVs

Tata Motors and Ashok Leyland for LCV / M & HCVs

Bajaj, TVS Motors and Hero Honda for 2 wheelers

Export of auto components

(USD million )

456625 578

760

1,800

1020

1400

FY00 FY01 FY02 FY03 FY04 FY05 FY06

25%

Market Overview


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Growth drivers for theIndian automotive industry

Contemporaryproducts

Shorter life cycle

Growth inIncome levels

Easierfinancing

GovernmentPolicies

Newproductlaunches

Indian AutomotiveIndustry

Increasingconsumer

demand

Cost Competitiveness

Overall economicgrowth

Lower duties &

taxes

ExportCompetitiveness

Reduced costto consumer

India emerging as amanufacturing hub

Market Overview


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Growth potential of theIndian automotive industry

Potential Vehicle sales in India in 2015 - 06 ( in mn)

2.65

0.64

27.8

0.87

0 10 20 30

2015-16

Cars CVs Two whee lers Three Whee lers

The size of the Indian automotive industry is

expected to grow at 13% p.a over the next

decade to reach around USD 120 - 159 bn

by 2016.

The total investments required to support the

growth is estimated at around USD 35 - 40 bn

0 5 10 15 20 25

Components

Exports

Domestic

Components

$ Billion

USD 20 - 25 bn

USD 13 - 15 bn

The Indian auto component industry is

well positioned to capitalise on the growth

in outsourcing to low cost countries

Exports would lead the growth in the

component industry, which is expected to

be around USD 33- 40 bn by 2015

Projected size of Auto Components industry - 2015

Source: AMP Vision, ACMA Vision

Market Overview


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Governmentregulations and policy Market Overview


IndiaAdvantage and business opportunities


12/23


Policies relating to the sector:Auto Policy

In 2002, the Indian government formulated an auto policythat aimed at promoting

integrated, phased, enduring and self-sustained growth of the Indian automotive industry

allows automatic approval for foreign equity investment upto 100%in the automotive sector and does not lay down any minimum investment criteria.

lays emphasis on R & D activities carried out by companies in India

Weighted tax deduction of upto 150% for in-house research and R & D activities

Formulation of an appropriate auto fuel policy to ensure availability of adequate amount

of appropriate fuel to meet emission norms

confirms the governments intention on harmonising the regulatory standards

with the rest of the world



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Automotive regulations in India

Indian automotive regulations are closely aligned to the ECE regulations. The table below shows the

level of alignment of the Indian regulations with the ECE regulations

Status of Indian RegulationNumber of

regulationsFully / Partially aligned 43In process of being aligned 32Items / Regulations to be covered 39Total 114

Source: IMaCS Analysis

The key regulations that are likely to impact the auto industry in the future are:

Crash Related Regulations

Introduction of Bharat Stage IV norms



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Trends in future regulations Safety and Emission related

2009200

8

200

62004

200

72005 2010

Crash requirements aligned with EU

Mandatory Airbags

Bharat Stage IV in Metros and BharatStage III in rest of the country

India is expected to align its crash requirements and emissionstandards with European standards in the 2008 / 09timeframe

Presently Bharat Stage III ( Equivalent to Euro III) ismandated in Metros and other large cities and Bharat Stage II( Equivalent to Euro II) for the rest of the country

Bharat Stage IV ( equivalent to Euro IV) is expectedto be introduced in the large Indian metros around 2009and Bharat Stage III in the rest of the country

Approach

Harmonization with ECE standards

Homologation and Certificationtesting agencies and centres

Regulation Road Map Targets

Industry challenges to development

Better vehicles: safer and moreenvironment friendly



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State-of-the-art test facilities will supportthe growth of the auto industry

The Government of India is promoting

National Automotive Testing and R&D

Infrastructure Project (NATRIP) to support

the growth of the auto industry in India

NATRIP envisages setting up of fiveindependent and up gradation of existing testcentres

Testing centres at Manesar (Haryana),Chennai (Tamil Nadu), Pune (Maharashtra)

Proving ground at Indore (MP)

Tractor testing facility at Rae Bareilly (UP)

Hill Driving Training Centre at Silchar (Assam)

New testing &homologation center

at MANESAR

Up-gradation ofVRDE at

AHMEDNAGAR

Up-gradation ofARAI at PUNE

New testing centerfor tractors & off-

road vehicles,accident data analysis

and specialiseddriving training atRAE BAREILLY

New test &homologation

center nearCHENNAI

New completeproving ground at

INDORE

Hill Area drivingtraining center

and Regional In-Use vehicle

managementcenter at

SILCHAR



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India Advantage and

business opportunities Market Overview




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Attractiveness of the Indianautomotive industry

Large and growing domestic demand Demand growth expected to be around

10 % CAGR making India one of the fastestgrowing markets

Proven product Developmentcapabilities

Capabilities to develop complete vehiclesand systems

More than 125 Fortune 500 (including largeauto companies) have R&D centres in India

Companies can leverage Indias

acknowledged leadership in the IT industry

Stable economic policies Continuity in reforms and policies India targets to emerge as the

manufacturing hubfor small cars

Competitivemanufacturing costImplementation of VAT, haspositioned India as one of theleading low costmanufacturing sources

High quality standards 12 Indian component

manufacturers have won theDeming Prize for quality

Most leading componentmanufacturers are QS andISO certified

Export Potential Increased outsourcing has led to

a large potential to exportcomponents and vehiclesto other markets

IndianAuto

Industry



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Opportunities in the Indianautomotive sector

Participate in domestic growth

opportunities Exports of vehicles

Exports of components

Engineering and DesignServices

IndianAutomotive

Sector

Domestic Opportunities Global outsourcingOpportunities

Potential investors can capitalise on opportunities both in the domestic

and export oriented segments Investment potential of upto USD 35 - 40 bn in this sector over the next 10 years

Investments in the Indian automotive industry can be in various forms

100 % subsidiary - 100 % FDI through automatic route allowed in this sector

JVs with local firms

Technology support or sharing agreements



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Key players in the Indian auto industry -Passenger Cars and CVs

The largest player in the Indian industry. Plans to launch new and excitingproducts in the Indian markets, including the 100,000 car

Suzukis JV in India and the largest passenger car manufacturer in India

The third largest passenger car manufacturer in India and one of thelargest exporters of vehicles. Has established India as one of its manufacturingbases in the world. Is planning to invest heavily to boost exports from India

Has vision of capturing 10 % share of the Indian passenger car market by 2010

One of the leading players in the Indian premium cars segment

One of the leading players in the Indian premium cars segment



20/23


Key players in the Indian autoindustry - Passenger Cars and CVs

One of the leading players in the Indian premium cars segment.Plans to enter the small car segment by re-launching the Matiz

One of the largest players in the UV / MUV segment

The 2nd largest CV manufacturer in India

Other global players who are in India / have plans for India include -

Volvo, Daimler Chrysler, BMW and Nissan Motors



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Key players in the Indian autoindustry - Two wheelers

The largest 2 wheeler manufacturer in the world

The 2nd largest 2- wheeler manufacturer in India and the largest3 wheeler manufacturer. Has plans for establishing a manufacturingfacility in Indonesia

The third largest 2 wheeler manufacturer in India. Has plansfor establishing a manufacturing facility in Indonesia

Has recently entered the Indian market through its direct subsidiary

( in addition to its JV Hero Honda)Has recently entered the Indian market through its direct subsidiary



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objective is to build positive economic perceptions of India globally

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23/23


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