Auto Industry Analysis
Content
AUTO INDUSTRY ANALYSIS
Automobile industry Tenth largest in the world with an annual production of approximately 2 million units Expected to become one of the major global automotive industries in the coming years
AUTOMOBILE
2 WHEELER
3 WHEELER
PASSENGER VEHICLE
COMMERCIAL VEHICLE
India is…. • Largest three wheeler market in the world • 2nd largest two wheeler market in the world • 4th largest passenger vehicle market in Asia • 4th largest tractor market in the world
Evolution of Early Automobile Industry to mid 90s
itial Years •Seller’s market and anufacturing was licensed long waiting periods High Customs duty on import teep excise duties & •Delicensing in 1993 ales tax Major players: •Removal of capacity emier Automobiles Ltd restrictions Hindustan Motors •Decrease in 980s customs & excise ntry of MUL, better product, th government support •Auto finance boommore players (foreign eller’s Market banks & non banking companies, better ong Waiting Periods schemes.
Mid 90s – Early 2000s •Buyers market •Increase in Indigenization •Easy Auto finance •Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market
Trends in Automobile sector
Continue…………. (Number of Vehicles)
Automobile Production Trends
Category
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Passenger Vehicles
723,330
989,560
1,209,876
1,309,300
1,545,223
1,762,131
Commerci al Vehicles
203,697
275,040
353,703
391,083
519,982
545,176
Three Wheelers
276,719
356,223
374,445
434,423
556,126
500,592
Two Wheelers
5,076,221
5,622,741
6,529,829
7,608,697
8,466,666
8,026,049
Grand Total
6,279,967
7,243,564
8,467,853
9,743,503
11,087,997 10,833,948
Automobile Domestic Sales Trends
(Number of Vehicles)
Category
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Passenger Vehicles
707,198
902,096
1,061,572
1,143,076
1,379,979
1,547,985
Commercia 190,682 l Vehicles
260,114
318,430
351,041
467,765
486,817
Three Wheelers
231,529
284,078
307,862
359,920
403,910
364,703
Two Wheelers
4,812,126
5,364,249
6,209,765
7,052,391
7,872,334
7,248,589
Grand Total
5,941,535
6,810,537
7,897,629
8,906,428
10,123,988
9,648,094
Automotive industry crisis • global financial crisis in the auto industry that began during the latter half of 2008 • weakened by the substantially more expensive automobile fuels linked to the 2003-2008 oil crisis • the global financial crisis and the related credit crunch placed pressure on the prices of raw materials • In 2009, the vehicle companies of the world are being hit hard by the economic slowdown across national
BUDGET 2008-09 • consumption-driven growth • policy on inclusive growth • attempt to address farmer's woes
Pre-budget Demands of the Automotive Industry • The adoption of a uniform excise structure of 16 percent across all passenger cars and utility vehicles • The reduction of excise duty on twowheelers and three-wheelers from 16 percent to 8 percent to offset declining sales • The provision of benefits for the development of hybrid technology • The offer of liberal credit to the agricultural sector to encourage the purchase of tractors
Budget Proposals Directly Impacting the Indian Automotive Industry
Analysis of current scenario High interest rates, high domestic oil prices and inadequate vehicle financing have continued to affect the overall automobiles sector The current slowdown in economic growth and automobiles industry has further deteriorated due to the global financial market crisis which has created volatility in stock markets and exchange rates and aggravated lack of liquidity
Continued….... Automobile companies are reducing production by shutting plants for a few days to avoid inventory build-up and in anticipation of seeing further downside
Volume Growth of Automobile Sector in Print during 2008
Compared to 2007, Print advertising of Automobiles dropped by 13% during 2008..
Share of categories of Automobile sector in Print during 2008
'Passenger Vehicles' were the front runners in Print advertising with 64% share followed by ‘Motorcycle’ and ‘Commercial Vehicles’ with 17% and 7% share respectively during 2008.
State-wise share of Automobile sector in Print during 2008
Tally of Automobile Advertisers in Print during 2008
• 4% rise in number of Automobile advertisers in Print during 2008 compared to 2007
Usage of Sales Promotions ad campaigns in the Automobile sector
More than 55% of Automobile ads in Print were for Sales Promotion during 2008.
KEY ENABLERS
KEY CHALLENGES
• Favorable Demographics •Cost Pressure • Improving income curve •High Expectations • Reducing interest rates •Inadequate Infrastructure Developme Key Focus Areas • Product development( includes collaboration, new products developed) • Vendor base (quality of vendors, skill levels , size etc.) • Manufacturing capability( quality levels, productivity & skill levels, technology ) • Service levels • Supply chain • Labor law • Leverage IT Key Features of Future Auto Policy • Foreign Direct Investment • Import tariff • Incentives for Research and Development (R&D) • Environmental Aspects
Thank You !
Automobile industry Tenth largest in the world with an annual production of approximately 2 million units Expected to become one of the major global automotive industries in the coming years
AUTOMOBILE
2 WHEELER
3 WHEELER
PASSENGER VEHICLE
COMMERCIAL VEHICLE
India is…. • Largest three wheeler market in the world • 2nd largest two wheeler market in the world • 4th largest passenger vehicle market in Asia • 4th largest tractor market in the world
Evolution of Early Automobile Industry to mid 90s
itial Years •Seller’s market and anufacturing was licensed long waiting periods High Customs duty on import teep excise duties & •Delicensing in 1993 ales tax Major players: •Removal of capacity emier Automobiles Ltd restrictions Hindustan Motors •Decrease in 980s customs & excise ntry of MUL, better product, th government support •Auto finance boommore players (foreign eller’s Market banks & non banking companies, better ong Waiting Periods schemes.
Mid 90s – Early 2000s •Buyers market •Increase in Indigenization •Easy Auto finance •Manufactures diversifying into related activities: finance lease, fleet management, insurance and used car market
Trends in Automobile sector
Continue…………. (Number of Vehicles)
Automobile Production Trends
Category
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Passenger Vehicles
723,330
989,560
1,209,876
1,309,300
1,545,223
1,762,131
Commerci al Vehicles
203,697
275,040
353,703
391,083
519,982
545,176
Three Wheelers
276,719
356,223
374,445
434,423
556,126
500,592
Two Wheelers
5,076,221
5,622,741
6,529,829
7,608,697
8,466,666
8,026,049
Grand Total
6,279,967
7,243,564
8,467,853
9,743,503
11,087,997 10,833,948
Automobile Domestic Sales Trends
(Number of Vehicles)
Category
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
Passenger Vehicles
707,198
902,096
1,061,572
1,143,076
1,379,979
1,547,985
Commercia 190,682 l Vehicles
260,114
318,430
351,041
467,765
486,817
Three Wheelers
231,529
284,078
307,862
359,920
403,910
364,703
Two Wheelers
4,812,126
5,364,249
6,209,765
7,052,391
7,872,334
7,248,589
Grand Total
5,941,535
6,810,537
7,897,629
8,906,428
10,123,988
9,648,094
Automotive industry crisis • global financial crisis in the auto industry that began during the latter half of 2008 • weakened by the substantially more expensive automobile fuels linked to the 2003-2008 oil crisis • the global financial crisis and the related credit crunch placed pressure on the prices of raw materials • In 2009, the vehicle companies of the world are being hit hard by the economic slowdown across national
BUDGET 2008-09 • consumption-driven growth • policy on inclusive growth • attempt to address farmer's woes
Pre-budget Demands of the Automotive Industry • The adoption of a uniform excise structure of 16 percent across all passenger cars and utility vehicles • The reduction of excise duty on twowheelers and three-wheelers from 16 percent to 8 percent to offset declining sales • The provision of benefits for the development of hybrid technology • The offer of liberal credit to the agricultural sector to encourage the purchase of tractors
Budget Proposals Directly Impacting the Indian Automotive Industry
Analysis of current scenario High interest rates, high domestic oil prices and inadequate vehicle financing have continued to affect the overall automobiles sector The current slowdown in economic growth and automobiles industry has further deteriorated due to the global financial market crisis which has created volatility in stock markets and exchange rates and aggravated lack of liquidity
Continued….... Automobile companies are reducing production by shutting plants for a few days to avoid inventory build-up and in anticipation of seeing further downside
Volume Growth of Automobile Sector in Print during 2008
Compared to 2007, Print advertising of Automobiles dropped by 13% during 2008..
Share of categories of Automobile sector in Print during 2008
'Passenger Vehicles' were the front runners in Print advertising with 64% share followed by ‘Motorcycle’ and ‘Commercial Vehicles’ with 17% and 7% share respectively during 2008.
State-wise share of Automobile sector in Print during 2008
Tally of Automobile Advertisers in Print during 2008
• 4% rise in number of Automobile advertisers in Print during 2008 compared to 2007
Usage of Sales Promotions ad campaigns in the Automobile sector
More than 55% of Automobile ads in Print were for Sales Promotion during 2008.
KEY ENABLERS
KEY CHALLENGES
• Favorable Demographics •Cost Pressure • Improving income curve •High Expectations • Reducing interest rates •Inadequate Infrastructure Developme Key Focus Areas • Product development( includes collaboration, new products developed) • Vendor base (quality of vendors, skill levels , size etc.) • Manufacturing capability( quality levels, productivity & skill levels, technology ) • Service levels • Supply chain • Labor law • Leverage IT Key Features of Future Auto Policy • Foreign Direct Investment • Import tariff • Incentives for Research and Development (R&D) • Environmental Aspects
Thank You !
