India New Vehicle Market Prospects to 2015

Published on February 2017 | Categories: Documents | Downloads: 17 | Comments: 0 | Views: 169
of 28
Download PDF   Embed   Report

Comments

Content

India's new vehicle market: prospects to 2015

India's new vehicle market: prospects to 2015
Published: February 2011

An AutomotiveWorld.com report published by: Automotive World Ltd 19 Neptune Court Vanguard Way Cardiff, CF24 5PJ United Kingdom Tel: +44 (0) 2920 468 902 Fax: +44 (0) 2920 468 903 http://www.automotiveworld.com

COPYRIGHT STATEMENT
© 2011 All content copyright Automotive World Ltd. All rights reserved. This publication, nor any part of it, may be shared, copied, reproduced, stored in a retrieval system, or be transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without the prior permission of Automotive World Ltd.

DISCLAIMER
This report is the product of extensive primary and secondary research. It is protected by copyright under the Copyright, Designs and Patents Act 1988. The authors of Automotive World Ltd research reports are drawn from a wide range of professional and academic disciplines. The facts within this report are believed to be correct at the time of publication but cannot be guaranteed. The information within this study has been reasonably verified to the author’s and publisher’s ability, but neither accept responsibility for loss arising from decisions based on this report. This report contains forward-looking statements that reflect the authors' current views with respect to future events. Such statements are subject to risks and uncertainties. If any of the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. The authors do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. All the estimates are based on assumptions, the authors' calculations and publicly available data. AutomotiveWorld.com is not liable for misrepresentation or misuse of such information or validity of publicly available information.

ABOUT THE AUTHORS:
Martin Kahl
Martin Kahl is Features Editor at AutomotiveWorld.com. He has over twelve years’ experience in the automotive industry. Martin began his career as a researcher and analyst at a specialist automotive consultancy, supplying bespoke research reports for OEMs, suppliers and other clients in the automotive industry. Martin joined AutomotiveWorld.com in 2008.

Jonathan Storey
Jonathan Storey has worked in the motor industry for more than twenty years. Beginning as a financial analyst for Ford Motor Company, he later moved into the consultancy sector providing research, analysis and forecasting services for vehicle manufacturers, suppliers and regulatory authorities. He is the author of AutomotiveWorld.com’s reports: "World's Car Manufacturers - a financial and operating review" and "World's Truck Manufacturers - a financial and operating review". He is also co-author of "Electric Vehicles-prospects for battery, fuel cell and hybrid powered vehicles".

Dr Peter Wells
Peter Wells has a degree in Geography from Leeds University, and an MSc in Town Planning from Cardiff University, while his PhD (also from Cardiff University) was on the subject of the socio-economic consequences of military R&D in the UK. He joined Cardiff Business School's Centre for Automotive Industry Research at its inception in 1990 and has since specialised on economic, strategic and environmental aspects of the world automotive industry. He is particularly interested in small scale, decentralised economic organisation as a means to achieve sustainable consumption and production.

Thaisa Faro Magalhaes
Thaisa Faro Magalhaes is a freelance researcher based in Cardiff.

Glenn Brooks
UK-based freelance Glenn Brooks is a regular contributor to AutomotiveWorld.com. A former editor and news editor for various specialist automotive titles and newswires, he now specialises in future vehicle programme research as well as OEM, production and product analysis.

Contact Details:
Automotive World 19 Neptune Court Vanguard Way Cardiff CF24 5PJ Telephone: Fax: E-Mail: Website: +44 (0) 2920 468 902 +44 (0) 2920 468 903 [email protected] www.automotiveworld.com

Contents

i

TABLE OF CONTENTS LIST OF TABLES / FIGURES EXECUTIVE SUMMARY INTRODUCTION CHAPTER 1: COUNTRY PROFILE
Socio-political data - India Macro-economic data Imports, exports & sectoral activity Infrastructure data Overview and History
Brief history Overall outlook Economic outlook Overview of the automotive sector The Indian automotive market – a summary of recent activity Vehicle production in India Recent key manufacturing investments and announcements

ii 1 2 3
3 3 4 4 5
5 5 5 7 7 8 9

CHAPTER 2: PASSENGER VEHICLES IN INDIA – A MARKET OVERVIEW
SIAM reports Segmentation Maruti Suzuki – market leader Hyundai Tata Motors General Motors Mahindra and Mahindra Ford Renault-Nissan Alliance and Bajaj Toyota Volkswagen Group

11
11 11 12 13 13 13 14 14 14 14 14

CHAPTER 3: COMMERCIAL VEHICLES IN INDIA – A MARKET OVERVIEW
Market overview 2010 Commentary – commercial vehicles

15
15 15

CHAPTER 4: MARKET FORECASTS OUTLOOK
Passenger vehicles Commercial vehicles

17 19
19 19

APPENDIX 1: DEFINITIONS APPENDIX 2: EMISSION STANDARDS APPENDIX 3: FORECASTING PASSENGER CARS APPENDIX 4: FORECASTING COMMERCIAL VEHICLES
Long term developments Freight demand Existing capacity Data availability

20 20 20 21
22 22 22 22

India's new vehicle market: prospects to 2015

automotiveworld.com

Contents

II

LIST OF TABLES / FIGURES
Table 1: Socio-political data - India Table 2: Macro-economic data Table 3: Imports, exports & sectoral activity Table 4: Infrastructure data Table 5: OECD economic data Table 6: Vehicle Sales, 2003-04 to 2009-10 (Number of Vehicles) Table 8: Vehicle Production, 2003-04 to 2009-10 (Number of Vehicles) Table 7: Forecast growth rates (%) for the Indian market by segment, 2010-11 Table 9: Production by manufacturer and type of vehicle (units), 2009. Table 10: Key model launches in india - 2010-2012 Table 12: Top 10 best-selling passenger car brands in 2010 Table 11: Top 10 best-selling passenger car models in 2010 Table 13: Top 5 best-selling LCV and HCV brands in 2010 Table 14: Sales Table 15: Market share Table 16: Emission Standards for diesel trucks and buses in India Figure 1: The fundamentals of truck demand Figure 2: EU freight by mode Market share 3 3 4 4 6 7 8 8 9 12 13 13 15 17 18 20 21 22

India's new vehicle market: prospects to 2015

automotiveworld.com

Executive summary

1

EXECUTIVE SUMMARY


Size of India’s total vehicle market in 2010: 14.82 million units Passenger cars, utility vehicles (UVs) and MPVs accounted for 2.37 million units LCV sales stood at 272,878 units in 2010, and HCV sales totalled 379,824 units Unlike most developed markets, two- and three-wheelers are an important part of the demand equation in India Growth in 2010: The total market grew by 31% year-on-year. Passenger car sales (including UVs and MPVs) rose by 30%, whilst commercial vehicle sales rose by 45% Total sales (cars and CVs) to exceed 4 million units by 2015 versus 2.99 million in 2010 and 1.75 million in 2006 Best-selling passenger car brand: Maruti Suzuki Best-selling passenger car model: Maruti Alto Tata Motors was the best-selling brand in LCV and HCV categories in 2010 Daimler to enter the Indian commercial vehicle market by 2012 with new range of vehicles to be sold under new market-specific brand. Growing importance of joint ventures in commercial vehicle sector Population of 1.15 billion with median age of 25, one of the youngest among large economies and lower than Chinese figure of 34. Middle class expected to swell from around 50 million currently to 550 million by 2025. Automotive Mission Plan targets employment of 25 million people by 2016. Car parc expected to grow from 15 million vehicles to 25 million by 2015.





























India's new vehicle market: prospects to 2015

automotiveworld.com

Introduction

2

INTRODUCTION
India is becoming an increasingly important player in the global automotive industry, both in terms of vehicle production and vehicle sales. Passenger car sales in India have risen from around 1 million units in 2003 to 2.37 million units. Commercial vehicle sales have risen from around 260,000 units in 2003 to well over half a million units. Vehicle sales in India in 2010 totalled 14.82 million units, up 31% from 11.32 million in 2009, according to the Society of Indian Automobile Manufacturers (SIAM). Of this total (which comprises all forms of motorised vehicular transport, including two-wheelers) passenger car sales accounted for 2.37 million units, up 30% year-on-year (2009: 1.82 million). The Indian passenger car market was the second-fastest growing of the major automotive markets in 2010, behind China (India 30%, China 33.2%). However, the Indian commercial vehicle market was the fastest growing of the major automotive markets, with a growth of 45% far ahead of China’s 29.9%. This report provides: Socio-politic and macro-economic data, as well a historic overview of the country and a summary of the country’s vehicle market. ◆ Historical data from 2006, with a forecast to 2015. ◆ Examination of the passenger and commercial vehicle markets in 2010, with insight into the prospects for these markets.


India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

3

CHAPTER 1: COUNTRY PROFILE
Table 1: Socio-political data - India
Population statistics Size Age structure Life expectancy Population growth rate 1.155bn people (World Bank, July 2010) 0-14yrs 30.5%, 15-64yrs 64.3%, >65yrs 5.2% 67.46 years (men), 72.61 years (women) (2009 estimate) 1.37% (2010 estimate)

NP: Population of metropolitan areas often significantly higher e.g. Mumbai 21.9m, Dehli 18.9m Source: World Gazetteer Largest cities by population (million people) Mumbai (Maharashtra) Delhi (Delhi) Bangalore (Karnataka) Kolkata (West Bengal) Chennai (Tamil Nadu) Hyderabed (Andhra Pradesh)

2010 estimate 13.83 12.57 5.44 5.14 4.62 4.07

2010 estimate 11.98 9.88 4.30 4.57 4.34 3.64

Language Ethnicity Religion Polictial structure

Hindi, English and at least 16 other official languages Indo-Aryan 72%, Dravidian 25%, Mongoloid and other 3% (2000) Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8%, unspecified 0.1% (2001 census) Federal republic

Table 2: Macro-economic data
Economic indicators - India GDP current prices Real GDP annual growth GDP at PPP GDP at PPP per capita Memo: US GDP per capita Share of GDP (fiscal year) Agriculture Industry Services Population Exports (fiscal year) Imports (fiscal year) CPI annual growth % % % mils US$ mils US$ mils (%) 35.7 20.1 44.2 692.6 8,485 15,867 9.1 29.3 21.5 49.2 23.9 18.6 57.5 18.8 20.1 61.1 18.1 20.8 61.1 18.0 20.7 61.3 17.2 19.8 63.0 17.1 19.9 63.0 16.8 20.1 63.1 15.8 21.0 63.2 1,299.2 367,00 652,000 4.0
(3) (3) (3) (1) (3) (3) (1)

1980 Rupees bn % US$bn US$ US$ 1,435 3.6 288 416 12,249

1990 5.6 750 870

2000 4.4 1,582 1,582

2005 9.2 2,434 2,153

2006 9.7 2,756 2,402

2007 9.9 3,118 2,677

2008 6.4 3,390 2,868

2009 5.7 3,615 3,015

2010 9.7 4,001 3,291

2015 137,348 8.1 6,385 4,914 55,409

Notes
(1) (1) (1) (2) (1)

5,705 21,566 35,709 41.140 47,633 54,873 59,520 70,842

23,198 32,252 42,681 44,823 46,577 47,155 45,934 47,132

862.2 1,042.6 1,130.6 1,147.7 1,165.0 1,182.1 1,199.1 1,215.9 18,145 44,560 103,091 126,414 162,904 185,295 178,750 194,480 24,073 50,537 149,166 185,735 251,439 303,696 288,373 316,634 13.2 3.2 5.3 6.7 5.5 9.7 15.0 8.6 (3) Reserve Bank of India to 2009. Forecasts: Automotive Reports Ltd.

(1) IMF. Actuals to 2009 2010 & 2015 forecast. (2) Calculated.

India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

4

Table 3: Imports, exports & sectoral activity
Exports US$ bn Total (yr to March 2010) 178.75 Of which: UAE 23.97 USA 19.54 China 11.62 Hong Kong 7.89 Singapore 7.59 Netherlands 6.40 UK 6.22 Germany 5.41 Saudi Arabia 3.91 France 3.82 Other 82.39 Source: Ministry of Commerce & Industry GDP contributions of different sectors Trade, hotels, transport & communication Agriculture, forestry & fishing Financing, insurance & business services Community, social & personal services Manufacturing Construction Mining & quarrying Electricity, gas & water supplies % 13.4 10.9 6.5 4.4 4.2 3.6 3.5 3.0 2.2 2.1 46.1 Imports Total (yr to March 2010) Of which: China UAE Saudi Arabia USA Switzerland Australia Iran Germany Indonesia S. Korea Other US$ bn 288.4 30.8 19.5 17.1 17.0 14.7 12.4 11.5 10.3 8.7 8.6 137.8 % 10.7 6.8 5.9 5.9 5.1 4.3 4.0 3.6 3.0 3.0 47.8

Yr to March 2010 (%) 24 17 16 15 15 9 2 2 100

Table 4: Infrastructure data
Transport statistics - India Infrastructure Country size 1,000 sq km Roads (total) 1,000km Roads(surfaced) 1,000km National highway 1,000km Freight sector Rail freight bn-t-km Road freight bn-t-km Total bn-t-km Rail freight % Road freight % Total % Vehicles in circulation Total 000's 2-Wheelers 000's Cars 000's Goods vehicles 000's Buses 000's Total cars, trucks, buses 000's Others inc. 3-wheelers, trac000's tors & trailers Cars per 1,000 people Cars Goods veh. per 1,000 Vehicles people Total veh. per 1,000 people Vehicles 1980 1990 2000 2005 2006 2007 2008 2009 2010 2015

3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 3,287.6 1,485.4 2,331.1 3,373.5 4,003.9 4,140.5 4,236.4 4,290.0 4,340.0 4,390.0 4,690.0 n/a n/a 1,390.6 1,910.8 1,997.3 2,090.3 2,136.4 2,226.0 2,268.0 2,511.0 31.7 33.7 52.0 66.6 66.6 66.8 71.0 75.2 78.1 106.7 147.7 90.9 238.6 61.9 38.1 100.0 5,391 2,618 1,160 554 162 1,876 897 1.7 0.8 7.8 235.8 145.1 380.9 61.9 38.1 100.0 21,374 14,200 2,954 1,356 331 4,641 2,533 3.4 1.6 24.8 312.4 441.8 483.4 526.4 554.8 581.3 631.9 852.4 494.0 658.9 766.2 839.0 901.1 961.4 1,059.5 1,488.7 806.4 1,100.7 1,249.6 1,365.4 1,455.9 1,542.8 1,691.4 2,341.1 38.7 40.1 38.7 38.6 38.1 37.7 37.4 36.4 61.3 59.9 61.3 61.4 61.9 62.3 62.6 63.6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 54,991 38,556 7,058 2,948 634 10,640 5,319 6.8 2.8 52.7 89,610 64,700 11,560 4,391 986 16,937 7,973 10.2 3.9 79.3 92,154 66,935 11,419 4,544 1,018 16,981 8,238 9.9 4.0 80.3 95,893 69,282 12,251 4,792 1,061 18,104 8,507 10.5 4.1 82.3 99,971 102,821 107,040 136,146 71,746 73,182 75,841 94,201 13,245 14,233 15,293 23,810 5,071 5,293 5,451 6,823 1,119 1,168 1,204 1,452 19,435 20,693 21,948 32,085 8,790 11.2 4.3 84.6 8,946 11.9 4.4 85.8 9,251 12.6 4.5 88.0 11,020 18.3 5.3 104.8

Note: All data refers to fiscal year. Sources: Ministry of Road Transport & Highways to 2008. Forecasts by Automotive Reports

India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

5

Overview and History
Brief history
India is the most populous democracy in the world, with a long and complex history. It has been transformed into a fast-growing economy since economic reforms took place in 1991. Home to a region of historic trade routes and extensive empires, the country was colonised by the United Kingdom from the mid-nineteenth century, becoming an independent nation in 1947. The sub-continent subsequently suffered a partition, becoming (present day) India, Pakistan and Bangladesh. Conflicts between Pakistan and India are recurrent and they have been involved in three wars since 1947, two of them over the disputed territory of Kashmir. In 2004, a peace process started, but several bombings have taken place since then, including the Mumbai attacks of November 2008. India is a multi-ethnic society, and is home to a variety of wildlife in several protected habitats. It also has a huge cinema industry, whose products are among the most widely-watched films in the world. Nevertheless, the country is still tackling huge social problems such as high levels of poverty, malnutrition and illiteracy. The hosting of the Commonwealth Games in 2010 illustrated both government ambition and the problems in realising ambition in India.

Overall outlook
The economic reforms and foreign investment introduced from the late 1980s transformed India into a nation of massive economic and political power. The country’s well-educated urban middle class is rapidly increasing and its skilled workforce is especially appealing to international companies in search of outsource work in sectors such as telecoms, finance, and medicine. But still, a sizable mass of the rural population remains impoverished and influenced by the ancient Hindu caste system, which allocates each person a place in the social hierarchy. Several measures have been introduced to empower underprivileged groups and provide them with better prospects of education and work. Also, discrimination on the basis of caste is now illegal. Nevertheless, poverty and under-employment are endemic to India - and the burgeoning gap between rich and poor is a potential source of social conflict in the future. The country has a large and somewhat inefficient and under-invested public sector that co-exists with a substantial and diversified private sector.

Economic outlook
India has done reasonably well in relation to the global economic recession as it compares favourably with the majority of other Asian economies. However, the growth achieved during the boom years of 2003/04-2007/08 on cutting the fiscal deficit has been reversed and the re-elected government (Indian National Congress) will need to encourage investors’ confidence and present market-friendly policies in order to avoid financing problems. In the November 2010 edition of its Economic Outlook report, the OECD commented: "The Indian economy expanded very strongly in early 2010. The agricultural sector enjoyed a sharp rebound, following a return of normal rainfall patterns, while the recovery in the non-agricultural sector continued to strengthen. More recently, activity has eased from its unusually strong pace and there are now signs that the economy is shifting from the recovery phase to one of sustained high growth. As fiscal stimulus continues to be withdrawn, a pick-up in consumption spending, aided by a recovery in farm incomes, and robust business investment are expected to be the mainstays of growth. The recovery in the agricultural sector has helped to damp inflation, which appears to have peaked and is expected to continue to moderate in the near term. Nevertheless, with domestic demand strong and the current account deficit widening, a steadfast commitment to timely fiscal consolidation and further moves to normalise the stance of monetary policy will be important for ensuring balanced growth ahead."

India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

6

Table 5: OECD economic data
Fiscal year Real DGP growth Inflation Consumer price index Wholesale price index Short-term interest rate Long-term interest rate Fiscal balance (percent of GDP) Current account balance (percent of GDP) Calendar year Real GDP growth Fiscal balance (percent of GDP) 6.3 -7 5.8 -10.2 9.9 -8.3 8 -7.6 8.5 -6.8 2008 5.1 7.2 9.1 8 9.6 7.6 -8.5 -2.4 2009 7.7 3.7 12.4 3.6 4.9 7.3 -9.6 -2.8 2010 9.1 11.3 9.1 8.1 6.7 8.7 -8.3 -3.2 2011 8.2 5.8 5.8 5.7 7.6 7.9 -7.4 -3 2012 8.5 5.1 5.2 5.5 7.6 7.9 -6.7 -2.9

India automotive timeline 1930s 1940s 1953 GM and Ford carried out some local assembly of kits. India's own vehicle manufacturers were established. The Tariff Commission in its report to Government stressed the need for a balanced and integrated development of the Automotive Industry by promoting the emergence of a strong auto-component sector. Consequently leading entrepreneurs were invited by Government to establish an auto-component manufacturing industry. 1970-80 India's automotive industry begins to grow relatively fast, fuelled by six automotive companies: Telco (now Tata Motors) Ashok Leyland Mahindra and Mahindra Hindustan Motors Premier Automobiles Bajaj Auto However, having a car is still seen as a luxury. This is partly because the sector's growth is held back by requirements for production licences and restrictions on both production within India and on imports. 1980-85 Japanese manufacturers begin to build motorcycle, car and commercial vehicle factories in India, often in partnership with Indian firms. Component manufacturers also enter into joint-venture agreements, with European and US firms. Exports start to grow. 1985-90 The auto component sector, which had been protected by high import tariffs, faces increased competition as the rules are changed. Maruti Udyog enters the passenger car segment. 1990-95 Economic liberalisation gets underway, allowing passenger car production without licences, though import restrictions remained in place. However, taxis still outnumber private cars in many parts of India Hero Honda emerges as a major operator in the motorcycle market, while Maruti Udyog becomes the leading passenger car maker. 1995-2000 International car makers enter the Indian market, a trend that accelerates. Advanced technology is introduced to meet competitive pressures, and environmental and safety imperatives. Vehicle manufacturers start investing in service network to support maintenance of on-road vehicles. Auto financing starts emerging as an important driver for demand. 2000-03 Starting in 2000, several landmark policy changes like removal of quantitative restrictions and the allowance of 100% foreign direct investment were introduced. Indigenously developed vehicles were introduced in the domestic market and exports were given a boost. Auto companies started collaboration with financial firms to provide auto financing and insurance services to customers. Manufacturers also introduced systems to improve capacity utilization and adopted quality and environmental management systems.
India's new vehicle market: prospects to 2015 automotiveworld.com

Country profile

7

2007

In 2002 Suzuki acquired a controlling stake in Maruti. In 2003, the Core-group on Automotive R&D (CAR) was set up to identify priority areas for automotive R&D in India. Ministry for Heavy Industries and Public Enterprises published the "Automotive Mission Plan 20062016". The aim of the plan is for India: “To emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$145 billion accounting for more than 10% of the GDP and providing additional employment to 25 million people by 2016.”

Overview of the automotive sector
The automotive industry in India is just over six decades old. Although automobiles were sold in the country from the turn of the late 1890s, the manufacturing industry only took off after independence in 1947. The industry has grown rapidly in recent years to become the seventh largest in the world in terms of car and commercial vehicle output which reached 2.8 million units in calendar 2010. This level of output was 3.9-times higher than in the year 2000. The country also produced about 0.76 million 3-wheelers in 2010 and 12.8 million 2-wheelers. For many years the industry was geared to supply the domestic market, but exports have been steadily increasing and in 2010 about 18% of car and CV output was exported (0.51 million units). The domestic market has grown rapidly in response to the government's more liberal economic policies and the consequent growth in India's economy. Although GDP per person (World Bank PPP basis) is still low at $3,248 in 2009, the country has a large middle-class population (about 450 million) with significantly higher incomes and these are buying not only more cars but also more expensive cars. For many years the automotive industry was dominated by Maruti in the car sector, Mahindra and Mahindra in the jeep sector and Tata and Ashok Leyland in the commercial vehicle sector. Other manufacturers included: Hindustan Motors, Premier Automobiles and Bajaj Tempo. In recent years the industry structure has changed, with Tata becoming a more significant force in the car sector and a number of foreign-owned assembly plants starting up. Despite this trend, in 2010 Maruti (now owned by Suzuki) still accounted for 43.5% of car demand and Tata for 62% of HCV demand. The automotive industry directly and indirectly employs about 13 million individuals in India. The Indian automotive components industry is highly competitive due to the presence of a number of global and Indian automotive companies. The industry reached a size of US$22bn in 2009-10 and is projected by the Automotive Component Manufacturers Association of India (ACMA) to reach $26bn in 2010-11 and $40bn by 2016. Exports by the component industry were $3.8bn in 2009-10.

The Indian automotive market – a summary of recent activity
The market in India recovered very quickly from the global economic crisis of 2008 and 2009 to show strong growth in 2010. Total sales of all vehicles rose to over 12 million units in 2009/10, and to 14.82 million units in calendar 2010. Table 6: Vehicle Sales, 2003-04 to 2009-10 (Number of Vehicles)
2003-04 2004-05 Passenger Vehicles 902,096 1,061,572 Commercial Vehicles 260,114 318,430 Three Wheelers 284,078 307,862 Two Wheelers 5,364,249 6,209,765 Grand Total 6,810,537 7,897,629 Source: SIAM - Society of Indian Automotive Manufacturers Note: data relates to fiscal year, April-March 2005-06 1,143,076 351,041 359,920 7,052,391 8,906,428 2006-07 1,379,979 467,765 403,910 7,872,334 10,123,988 2007-08 1,549,882 490,494 364,781 7,249,278 9,654,435 2008-09 1,551,880 384,122 349,719 7,437,670 9,723,391 2009-10 1,949,776 531,395 440,368 9,371,231 12,292,770

India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

8

The Society of Indian Automotive Manufacturers Table 7: Forecast growth rates (%) for the Indian market (SIAM) has conducted its own forecast for growth by segment, 2010-11 over the period 2010-11 with the results shown in Segment Growth rate % Table 2: Passenger cars 23-25 It can be deduced that the two and three-wheel segments are not going to disappear any time soon from the market in India, and hence will remain an important element in the automotive industry economy of the country. Such growth rates as shown in Table 2 may be optimistic if interest rates continue to rise.
Utility vehicles Light commercial vehicles Medium commercial vehicles Buses Motorcycles Scooters Three-wheelers (goods) Three-wheelers (passengers) Source: SIAM - Society of Indian Automotive Manufacturers Note: data relates to fiscal year, April-March 26-28 25-27 22-24 11-13 16-18 30-32 1-2 18-20

Vehicle production in India

In 2006, the government in India launched the Automotive Mission Plan (AMP) to provide an overall strategic framework for the development of the automotive industry up to 2015. Changes are still underway, with for example a recent agreement with South Korea to reduce tariffs on imported components from that country, which in turn will enable Hyundai and GM Daewoo (soon to become GM Korea Co) to export back out to Europe, Japan and elsewhere on a more competitive basis. Another significant free trade pact, between India and the EU, is expected to be signed during 2011. Table 3 gives an overview of production in India over recent years, where strong growth in car output is evident. On the other hand, as with the market it is also the case that motorcycle production remains dominant by a significant margin, and that two and three-wheel vehicles account for over 80% of production. Tata’s bid to capitalise on this market by offering a passenger car at motorcycle prices, in the form of the Tata Nano, has been slower to penetrate the market than anticipated, mostly because of constraints on production but also because of some well-publicised incidences of vehicle fires. Table 8: Vehicle Production, 2003-04 to 2009-10 (Number of Vehicles)
2003-04 2004-05 Passenger Vehicles 989.56 1,209,876 Commercial Vehicles 275,040 353,703 Three Wheelers 356,223 374,445 Two Wheelers 5,622,741 6,529,829 Grand Total 7,243,564 8,467,853 Source: SIAM - Society of Indian Automotive Manufacturers Note: data relates to fiscal year, April-March 2005-06 1,309,300 391,083 434,423 7,608,697 9,743,503 2006-07 1,545,223 519,982 556,126 8,466,666 11,087,997 2007-08 1,777,583 549,006 500,660 8,026,681 10,853,930 2008-09 1,838,697 417,126 501,030 8,418,626 11,175,479 2009-10 2,351,240 566,608 619,093 10,512,889 14,049,830

The AMP envisaged growing exports of cars from India and this is starting to happen, particularly with smaller cars such as the Maruti A-Star (sold in Europe as the Suzuki Alto and also supplied to Nissan as the Pixo), the Hyundai i20 and others. In late 2010, Nissan started exporting the new Indian-built Micra from the new Renault-Nissan plant at Chennai back to European markets, with plans to ship over 100,000 units in the 2010/11 fiscal year. In 2009, Hyundai was hit by labour disputes, as were other vehicle manufacturers to a lesser extent. Of course, Tata was forced to shift Nano production from its original plant in Bengal to an all-new facility at Sanand in Gujarat because of disputes with local farmers. In both cases, disruptions to production have been costly. In 2010, car exports reached 446,146 units, while exports of motorcycles reached over 1 million units, and exports of all types of vehicle totalled 1,804,619 units. According to SIAM, the gross turnover of the automotive industry in India grew from US$20.8 billion in 2003/04 to US$38.2 billion in 2008/09; given the strong showing in calendar 2010 this is expected to have increased still further. Hyundai exports about half its output to Europe, a pattern that other vehicle manufacturers may be expected to
India's new vehicle market: prospects to 2015 automotiveworld.com

Country profile

9

emulate in the future. Table 4 shows production by manufacturer for calendar year 2009, where the importance of Hyundai as the second largest car assembler can be seen. Table 9: Production by manufacturer and type of vehicle (units), 2009.
Ashok Leyland Fiat Ford GM Honda Hyundai Isuzu Mahindra & Mahindra Mitsubishi Renault Maruti Suzuki Tata Toyota Grand Total Cars 0 23,711 32,515 65,930 61,281 559,620 0 145,977 582 5,827 876,115 220,153 51,151 2,042,862 LCV 1,101 0 0 0 0 0 0 77,088 0 0 89,954 162,271 0 330,414 HCV 28,183 0 0 0 0 0 12,853 0 0 0 0 103,665 0 144,701 Heavy bus 18,410 0 0 0 0 0 0 0 0 0 0 19,379 0 37,789 Total 47,694 23,711 32,515 65,930 61,281 559,620 12,853 223,065 582 5,827 966,069 513,599 51,151 2,563,897

Source: OICA 2009; adjusted for double counting

A feature of the automotive industry in India is just how dynamic it is, with restructuring, alliances, new plants, capacity expansions and other plans continuously reshaping the sector at all levels. India’s role in the design and construction of small, low-cost cars is increasing, despite the problems experienced at Tata, Bajaj and elsewhere. In 2010, Volkswagen was reportedly in discussion with Suzuki’s local subsidiary, Maruti Suzuki, over collaboration on just such a project.

Recent key manufacturing investments and announcements
Inevitably, investment in the sector slowed down under difficult financial conditions worldwide in 2008 and 2009. Some projects were put back (such as the Renault-Nissan-Bajaj Ultra Low-Cost Car, or ULC) while in other cases investment has slowed down, for example with Honda-Siel. Among the major investments announced in 2010 and 2011 are:


Hyundai Motor India reported plans in January 2011 to invest Rs15bn (US$332.34m) in an expansion plan of its Sriperumbudur plant, near Chennai. The plant currently has output capacity of 600,000 vehicles per year and 40% of output is exported to 120 countries, making Hyundai the largest car exporter in India; GM plans to invest a further US$100m in a capacity expansion of its plant in Halol, Gujarat to increase from 85,000 to 105,000 units, according to reports in January 2011; GM in 2010 formally opened its new engine manufacturing plant at Talegaon in Maharashtra. GM has invested US$230m in the facility, which has an initial annual production capacity of 160,000 engines, with scope for future expansion; In December 2010, Toyota commissioned its second plant in India, located at Bidadi near Bangalore. Production in early 2011 was initially planned on a single shift, producing the Etios model; Force Motors announced in late 2010 plans to create a new plant for the production of small trucks with an investment of Rs4bn (US$88.99m) with a capacity for about 100,000 units per annum;









India's new vehicle market: prospects to 2015

automotiveworld.com

Country profile

10



In March 2010, the Renault-Nissan Alliance plant at Oragadam, near Chennai was inaugurated in a record time of 21 months since its groundbreaking ceremony in June 2008. With an investment of Rs45bn (US$1.01bn) over a period of seven years the plant has an initial capacity of 200,000 units per year and will be able to reach 400,000 units per year at full capacity in the future; Suzuki, which during 2011 is building its third plant in India, also announced plans in 2010 to build a fourth plant to start operations in 2013 with a capacity of 250,000 units per annum; Mahindra and Mahindra announced plans in mid-2010 for a US$1.84 billion investment programme over the next five years, including a new plant at Chakan; Cummins announced plans for four new plants with investments totalling US$300 million over five years, including a new engine plant with its joint venture partner Tata with an initial capacity of 60,000 units per annum. In March 2010 Daimler India Commercial Vehicles (DICV) announced plans to invest Rs44bn (US$967.6m), over the next five years, to set up a manufacturing plant near the southern Indian city of Chennai.









At the New Delhi Auto Expo in January 2010, General Motors India and Reva Electric Car Company unveiled the jointly-developed Chevrolet e-Spark. A few months later, Mahindra and Mahindra acquired a 55.2% stake in Reva, indicative of Indian OEMs’ long-term interests in the emergent electric vehicle market worldwide. Other OEMs are thought to be interested in investments in India. In February 2011, Peugeot confirmed plans to build and market vehicles in India, and Kia is reportedly keen to develop a manufacturing capacity in the country, while others such as Ford are reportedly looking to increase their manufacturing presence with new plants. The availability of incentives, plus the ability to play one state off against another, might be an important factor in influencing the eventual investment decisions.

India's new vehicle market: prospects to 2015

automotiveworld.com

Passenger vehicles in India

11

CHAPTER 2: PASSENGER VEHICLES IN INDIA – A MARKET OVERVIEW
Demand for passenger cars rose by 30.5% in 2010 to 2.37m units. Demand was strong throughout the year with yearon-year increases of 30-33% each quarter. This was in contrast to 2009 when demand accelerated throughout the year, rising by only 1.8% in Q1-09 but 49% in Q4-09. The drivers of demand in 2010 were principally: rising incomes and middle class aspirations; competitive pricing by OEMs; ◆ new model launches; ◆ the availability of finance, liquidity having fallen during the credit crisis; ◆ lower finance rates, down from circa 18% in 2000 to around 11% currently (having briefly risen to around 17% in the credit crisis); ◆ lower excise duty on small cars as part of the stimulus to counter the 2008-09 downturn; ◆ shortening ownership cycles; ◆ increased penetration in rural areas and minor cities.
◆ ◆

An appreciation of the role of two- and three-wheelers is important for an understanding of the Indian car market. Although figures for car density show the Indian market at about 12 cars per 1,000 people compared with around 500 cars per 1,000 people in the EU, this does not compare like with like. In India, factors such as the climate, road conditions and congestion in cities means that two- and three-wheelers are realistic alternatives to passenger cars for many buyers. If two- and three-wheelers are included in the calculation the Indian figure rises to 70-80 vehicles per 1,000 people. This needs to be considered when looking at potential levels of motorisation although this comment is not intended to downplay the substantial growth potential of the Indian car market.

SIAM reports
Please note that in its market reports, SIAM sub-divides Passenger Vehicles into three categories: Passenger Cars Utility Vehicles (UVs) ◆ MPVs
◆ ◆

Often when the headline figures for Indian car sales are reported it is only the passenger car numbers which feature. Our data for passenger cars includes UVs (which includes models such as the BMW X5) and MPVs, producing a figure higher than the sales figures typically reported in the non-specialist media. It has been reported that car sales in India stood at 1.87 million units. Our (preliminary) figure is 2.37 million units, with UVs and MPVs accounting for the difference. Similar issues are encountered in many markets - the US reporting of passenger cars separately to light trucks being the obvious example.

Segmentation
Despite the slowly rising if still only modest success of Tata Motors’ low priced Nano (fewer than 60,000 units sold in 2010), the best-selling vehicles in India have long been, and look likely to remain, family-sized five-door hatchbacks. Cars such as these - the Maruti Suzuki Alto and Wagon R, as well as the Hyundai i10, Tata Indica and Ford Figo - will no doubt remain hugely popular due to stringent taxation levels on vehicles with large engines and/or those exceeding certain dimensions as laid down by government regulations.

India's new vehicle market: prospects to 2015

automotiveworld.com

Passenger vehicles in India

12

Just above the Alto segment, where larger hatchbacks and sedans such as the Maruti Suzuki Swift, Dzire and Ritz, as well as the Tata Indigo and Manza compete, competition is increasing. There have been some casualties too, with the Mahindra Logan, a car that is presently being re-engineered (shortened) in the hope that it manages to sell to its potential instead of the disappointing 8,164 units that were registered in 2010. Small MPVs are the third segment to note, with the Maruti Suzuki Omni leading its class last year. With 92,539 units sold, the Omni was the country’s seventh best-selling vehicle. Tata Motors will be hoping that its new Venture, a rival model, will capture some of that success in 2011. Table 10: Key model launches in india - 2010-2012
2010 Ford Figo Maruti Suzuki Alto Maruti Suzuki Kizashi Maruti Suzuki Wagon R Nissan Micra Tata Nano Toyota Etios Volkswagen Polo Volkswagen Vento 2011 Audi A8 Chevrolet Cruze hatch, Sail Fiat Bravo Honda Accord, Brio Mahindra SUV Maruti Swift Nissan Sunny, Murano Renault Duster, Koleos Reva NXR and NXG Skoda Laura, SK215 Tata Prima, Safari Toyota Etios Liva VW Jetta, Passat, Touareg 2012 Ford Endeavour Ford Fusion Hyundai i10 Nissan MPV Renault-Nissan-Bajaj “ULC” Tata model (Alto competitor)

Maruti Suzuki – market leader
Maruti Suzuki, the long-time market leader, controls around 50% (57% in January 2011) of the passenger vehicle market. Its vast array of cheap to buy (and own) small cars, MPVs and SUVs gives it an unbeatable advantage against all comers, as does its extensive dealer network. The best-selling Alto, sales of which touched a record 300,950 units in 2010, continued to rise in January (33,118) keeping it firmly in position as the nation’s favourite model and almost twice as popular as the next best-selling vehicle. The replacement model is not scheduled to appear until 2013, by which time the original Alto will be 15 years old. The rising incomes and aspirations of buyers can be due to in 2011 or 2012 by Maruti Suzuki is a seen clearly in the identity of India’s number two One of the modelsthat wasbe launchedby the RIII concept at January 2010's New Swift-based MPV previewed best-selling car of 2010, the Maruti Suzuki Wagon Delhi Auto Expo. R. This little hatchback, closely based on the latest generation model from Japan, was launched locally only in April 2010 but still it managed 156,509 sales. With the growing popularity of this car, Maruti is clearly now looking to introduce yet more latest-technology Suzuki models, phasing out some of its more aged offerings in the process. That the relatively high-priced Kizashi sedan was launched locally in February shows caution (an import from Japan, no investment made on CKD build) and optimism (entry to a segment above Maruti’s usual price barriers). Models due to be launched in 2011 or 2012 from Maruti include the Eeco Charge, a plug-in version of an existing small MPV; a larger, Swift-based MPV that was previewed by the RIII concept at January 2010's New Delhi Auto
India's new vehicle market: prospects to 2015 automotiveworld.com

Passenger vehicles in India

13

Expo; and a locally-built version of the sixth-generation Table 11: Top 10 best-selling passenger car Suzuki Swift that was launched in Europe and Japan in models in 2010 2010. In 2013, the follow-up to the A-Star should arrive but Sales 2010 there is currently a question mark over the likelihood of a Model 300,950 direct replacement for the Pixo, a variant that Maruti makes Maruti Alto Hyundai i10 159,158 for Nissan Europe - Volkswagen’s shareholding in Suzuki is Maruti Wagon R 156,509 reportedly causing a reassessment of existing contractual Maruti Swift 142,549 manufacturing ventures.

Hyundai

Korea’s largest manufacturer is the number two brand in India, though Tata Motors is not far behind. The key to its success is the combination of the i10, i20 and Santro small cars, each of which competes directly with various Maruti Suzuki models. Hyundai’s strategy has changed in recent Source: vehicle manufacturer data, press releases, industry sources times, so that increasingly, the company is beginning to assemble its latest models from the Korean market fairly soon after their launch there. The new Accent, for example, is due to start being made at Hyundai Motor India’s number one plant in Chennai from April. Replacements for the i10 and i20 should follow in 2012 and 2014.

Tata Indica Maruti Dzire Maruti Omni Hyundai Santro Tata Indigo Mahindra Bolero

104,841 103,306 92,539 87,800 85,201 78,895

Tata Motors
After various hiccups, series production of Tata Motors’ Nano finally picked up steam in 2010, making it effectively the most important major new model to be sold nationwide last year. After a sudden fall-off in sales, a programme of incentives kick-started the little car’s popularity, with registrations for the year totalling 59,576 units. That number was not considered by Tata to be an accurate representation of the Nano’s potential, yet sales in January totalled only 6,703 and the car remained down in 12th place in the sales charts – exactly where it had ended 2010.
The Tata Prima, a concept luxury sedan designed by Pininfarina

Tata will be hoping to better challenge Hyundai and Maruti in the coming years. After the Nano, its next step will be a rival for the Chevrolet Cruze, as previewed by the Prima concept from the 2009 Geneva motor show. This car is due to be launched later in 2011 or possibly 2012, with a competitor to take on the Maruti Suzuki Alto reportedly set to appear towards the end of 2012.

General Motors
General Motors is seeing increasing, if still modest, success Table 12: Top 10 best-selling passenger car now that it has decided to concentrate on several core brands in 2010 segments. Its best-selling model in 2010 was the Chevrolet OEM Group Brand Beat (Spark) with 36,264 sales. In February 2011, GM Suzuki Maruti Suzuki launched the Chevrolet Beat LPG and its SMARTECH Hyundai Hyundai engine, and announced plans to launch six new models over Tata Tata the next two years. A hatchback variant of the Chevrolet Mahindra and Mahindra Mahindra and Mahindra Cruze should be launched locally in late 2011, while it is General Motors Chevrolet believed that the New Sail, a small car presently built only in Toyota Toyota China, may be assembled at GM India's Talegaon plant from Ford Ford 2012. Honda Honda
Fiat Volkswagen Source: Automotive Reports Ltd Fiat Volkswagen

India's new vehicle market: prospects to 2015

automotiveworld.com

Passenger vehicles in India

14

Mahindra and Mahindra
The relative lack of success of the Renault-based Logan sedan has been an important lesson for Mahindra. The Indian group, so successful in the commercial vehicle and agricultural equipment sectors, has pulled back somewhat while it redevelops the little car for local conditions. Mahindra’s own pick-ups and SUVs continue to sell very well, with the Bolero SUV ending 2010 as India’s 10th best-selling vehicle (78,895 sales) and the Scorpio in 17th position with 40,573 registrations. These two models will be joined in Q3 2011 by a smaller SUV (codename: W201) to be built in a new plant at Chakan, with the majority of output said to be headed for export markets. Also due in 2011 are the NXR and NXG, two small plug-in city cars to be launched by Mahindra-controlled Reva.

Ford
Suddenly, it is all coming right for Ford in India. The company’s decision to develop a new model from the previous generation Fiesta has proved right, with the car in question, the Figo, having record sales of 8,616 units in January and easily outselling the Tata Nano. New models to come for the company’s 200,000-unit Maraimalai Nagar plant near Chennai include a replacement for the Endeavour SUV and the Fusion hatchback, each of which is expected in 2012. The Focus may follow later.

Renault-Nissan Alliance and Bajaj

Renault, Nissan and two-wheeler specialist Bajaj Auto plan to build a combined 400,000 units per annum of a new small car from late 2012. To be priced and sized between the Tata Nano and Indica, the ‘ULC’ project will be built at a new plant under construction near Bajaj’s Chakan headquarters in the state of Maharashtra. Presently, both Nissan and Renault have only a minor presence in India, though the Alliance has its own production plant in the city of Chennai. This facility is the source of Nissan Europe’s all-new Micra hatchback.

Ford’s decision to develop a new model from the previous generation Fiesta has proved right, with the Figo having record sales of 8,616 units in January 2011 and easily outselling the Tata Nano.

Toyota
Toyota’s just-launched 1.5-litre Etios sedan and forthcoming 1.2-litre Etios Liva hatchback are unique products for India and built in a new plant with a stated capacity of only 70,000 units per annum. Toyota and its local partner, Kirloskar Motor, are expected to add far more production capacity for this model series in the medium term. Already, the partners have stated that they will start engine manufacturing in the third quarter of 2012, with transmissions to follow from early 2013. Later in 2013, Toyota should also replace the Innova MPV/SUV crossover, its current best-selling model (51,284 sales in 2010).

Volkswagen Group

Toyota’s just-launched 1.5-litre Etios sedan and forthcoming 1.2-litre Etios Liva hatchback are unique products for India and built in a new plant with a stated capacity of only 70,000 units per annum.

Volkswagen is keen on expanding the segment that archrival Toyota is now entering with its Etios, as well as the segment just above it. Local assembly of a special four-door sedan version of the VW Polo commenced during 2010, while Skoda should also add CKD build of a forthcoming Golf-based model by around 2013 or 2014, after launching a Hyundai Verna and Honda City rival (codename: SK215) in the second half of 2011.

India's new vehicle market: prospects to 2015

automotiveworld.com

Commercial vehicles in India

15

CHAPTER 3: COMMERCIAL VEHICLES IN INDIA – A MARKET OVERVIEW
Market overview 2010
Sales of LCVs (5 tonnes GVW) rose by 41% to 272,878 units in calendar 2010 having grown by 18.6% to 193,415 units in 2009. Sales of LCVs did not suffer an annual decline during the credit crisis, growing by 1.3% during 2008. HCV (> 5 tonnes GVW) sales totalled 379,824 units, rising 48% from 255,976 units in 2009. The 2009 figure represented a 19.7% fall from the pre-credit-crisis peak in 2007 when sales were 318,679 units. This level of decline was far more mild than that experienced in markets such as Europe and the US. Overall, commercial vehicle sales rose by 45% in 2010. Strong growth in demand for HCVs in 2010 following a two-year decline reflected: 9.9% (prelim.) growth in GDP; growing demand from across main customer groups; ◆ availability of finance and competitive rates; ◆ pre-buying ahead of new emission standards which came into effect on 1 October 2010; ◆ increased demand for transportation of industrial commodities and an increase in foreign trade; ◆ firm freight rates.
◆ ◆

Commentary – commercial vehicles
In terms of LCVs, Tata dominated the market, with sales of just over 139,000 units in 2010. Mahindra and Mahindra followed with just over 98,000 sales. Force Motors ranked third, with 12,972 sales, whilst the fourth and fifth places went to Piaggio Commercial Vehicles (8,958), and Hindustan (375 sales). In HCVs, Tata once again commanded a long lead, with 226,641 units putting it well ahead of second-placed Ashok Leyland, which sold just over 79,700 units. Ashok Leyland itself held a lead of more than twice the sales of thirdplaced heavy truck manufacturer, Eicher, whose joint venture with Volvo Trucks, VE Commercial Vehicles, reported 33,181 sales in 2010. Fourth and fifth places were held by Sumitomo Mazda (10,424) and Mahindra and Mahindra (7,907). Table 13: Top 5 best-selling LCV and HCV brands in 2010
Top 5 best-selling LCV brands in 2010 Tata Motors Mahindra and Mahindra Force Motors Piaggio Commercial Vehicles Hindustan Source: Automotive Reports Ltd Top 5 best-selling HCV brands in 2010 Tata Motors Ashok Leyland Eicher Motors Sumitomo Mazda Mahindra and Mahindra

Daimler plans to enter the Indian commercial vehicle market by 2012 with a new range of vehicles to be sold under a new market-specific brand. The vehicles will be in the 6-49t category, and will be based on existing platforms adapted for the Indian market. Daimler India Commercial Vehicles (DICV) will initially launch its new truck brand in the 25t category in Q2 2012, following 18 months later with other products in the 6-49t category. This will add to the existing Mercedes-Benz Actros range. In June 2010, Daimler also announced plans for Mercedes-Benz to enter the high-end city bus market, adding to the existing two- and three-axle luxury coaches it has already sold in that market since September 2008. Some interesting joint ventures are in operation in the commercial vehicle market in India. Ashok Leyland has numerous joint ventures with Nissan, including one for the production, marketing and distribution of light
India's new vehicle market: prospects to 2015 automotiveworld.com

Commercial vehicles in India

16

commercial vehicles within India and for export. The venture will produce three vehicles: a truck and a bus weighing 5-7.5t and an MPV The truck and bus are due to be launched in the first half of 2011 with the MPV to follow . by 2012. Mahindra and Mahindra has two joint ventures with Navistar, including one to produce and market light, medium and heavy commercial vehicles for India and export markets. Mahindra Navistar Automotives (MNAL) - which is split 51% Mahindra and Mahindra and 49% Navistar - has a plant at Chakan which will build two trucks (a 25-tonne and a 31-tonne truck) developed for the Indian market. The JV’s ultimate aim is to build and sell a range of trucks and buses from 4.5 to 49 tonnes GVW. MAN Force Trucks is a 50:50 joint venture between Force Motors and MAN Nutzfahrzeuge for the production and sale of trucks over 16 tonnes for the Indian and other Asian markets. The vehicles are marketed in India by the joint venture and outside India by MAN. VE Commercial Vehicles is the joint venture between AB Volvo and Eicher Motors. The joint venture’s product range, which includes Volvo-branded vehicles, comprises light-medium (5-12 tonnes GVW) vehicles, heavy (16-40 tonnes) trucks and buses. The company is also preparing to launch in early 2011 a 25t Tipper. In 2010, VE Commercial Vehicles reported a 57% year-on-year rise in sales, from 24,264 units in 2009 to 38,181 units.

India's new vehicle market: prospects to 2015

automotiveworld.com

Market forecasts

17

CHAPTER 4: MARKET FORECASTS
Table 14: Sales
Group BMW Daimler Fiat Force Ford GM Hindustan Honda Hyundai Mahindra Nissan Porsche Renault Suzuki Tata Toyota VW VW VW Other PC Total % Change Force Hindustan Mahindra Piaggio Tata Other LCV Total % Change Ashok Leyland Asia Motor Works (AMW) Mercedes-Benz Eicher Force Mahindra Sumitomo Tata Volvo Other HCV Total % Change Total CVs % Change Grand Total % Change Ashok Leyland Asia Motor Works (AMW) Mercedes-Benz Eicher Force Mahindra Mazda Tata Volvo Other 71,917 0 0 24,968 697 5,898 10,351 199,142 850 86 313,909 Force Hindustan Mahindra Piaggio Tata Other 125,286 160,946 28.5 75,587 0 163,029 1.3 63,353 2,095 193,415 18.6 43,776 3,220 272,878 41.1 82,424 5,487 228 34,322 2,217 8,177 10,780 234,376 1,633 180 379,824 48.4 652,702 45.2 3,021,010 33.4 6,083 311 35,353 0 83,539 Brand BMW Mercedes-Benz Fiat Force Ford Chevrolet Hindustan Honda Hyundai Mahindra Nissan Porsche Renault Maruti Tata Toyota Audi Skoda VW Other 2006 0 1,946 2,115 8,077 42,062 35,823 15,532 56,197 186,174 88,136 0 0 0 596,005 218,356 48,490 0 12,202 0 0 2007 1,196 2,294 2,887 8,134 39,434 58,851 12,200 60,386 200,412 118,416 0 0 0 710,531 228,038 54,166 0 12,385 0 0 15.1 9,196 67 48,523 2,575 100,585 2008 2,908 3,445 4,374 6,436 28,564 65,702 10,411 54,136 245,397 121,474 0 0 0 697,850 230,868 52,807 0 16,188 0 2,888 2.3 7,133 9 48,978 9,600 97,309 2009 3,619 3,226 22,757 5,217 29,452 69,071 9,757 62,337 289,863 149,952 133 0 0 836,886 259,961 54,320 977 14,577 1,671 1,265 17.6 7,104 209 64,083 10,006 112,013 2010 (prelim) 5,450 4,502 30,806 9,479 83,887 110,192 18,958 73,461 368,965 161,141 11,849 178 0 1,029,642 317,542 92,419 2,370 18,958 26,067 2,370 2,368,236 30.5 13,628 394 103,122 9,411 146,323 2011 (proj.) 5,843 5,081 31,728 8,891 93,915 126,914 20,322 81,214 373,171 167,559 43,160 203 8,891 1,045,895 330,011 131,994 3,302 22,863 35,539 3,810 2,540,306 7.3 15,303 294 107,721 10,302 156,554 3,825 293,999 7.7 87,021 5,613 1,203 36,093 2,967 8,420 11,230 245,026 2,245 1,127 400,945 5.6 694,944 6.5 3,235,265 7.1 2012 (proj.) 5,787 5,522 36,795 9,212 91,934 136,641 20,229 97,217 380,958 165,524 49,910 265 23,654 1,066,710 338,933 147,127 3,425 23,654 44,653 6,637 2,654,787 4.5 16,449 311 112,650 10,861 161,099 6,493 307,863 4.7 91,552 5,384 2,153 39,772 3,978 8,699 11,598 247,317 2,651 1,705 414,809 3.5 722,672 4.0 3,377,468 4.4 2013 (proj.) 6,363 6,647 38,746 9,658 99,620 149,444 20,481 107,914 409,557 171,572 60,874 426 30,423 1,112,405 362,488 160,494 3,323 24,912 55,335 9,914 2,840,596 7.0 14,769 271 100,648 9,572 140,719 7,825 273,804 -11.1 84,207 4,893 3,225 36,792 4,740 7,965 10,619 223,032 3,263 2,014 380,750 -8.2 654,554 -9.4 3,495,146 3.5 2014 (proj.) 7,310 7,621 45,697 10,048 112,703 169,069 21,309 115,751 453,827 182,757 76,151 622 36,551 1,200,097 399,016 170,562 3,951 27,437 57,860 12,412 3,110,751 9.5 14,375 265 94,866 9,148 132,869 10,458 261,981 -4.3 79,294 4,553 4,073 37,443 5,065 7,711 9,909 214,380 4,114 2,387 368,929 -3.1 630,910 -3.6 3,741,666 7.1 2015 (proj.) 8,303 8,640 49,854 10,959 122,937 184,422 23,263 119,642 498,404 189,397 86,395 840 43,198 1,282,551 431,977 186,069 5,009 29,885 63,132 16,775 3,361,652 8.1 16,621 313 112,279 10,974 158,756 13,785 312,728 19.4 87,473 5,061 4,986 41,057 6,954 8,788 11,352 245,346 5,217 3,441 419,675 13.8 732,403 16.1 4,094,082 9.4

1,311,115 1,509,330 1,543,448 1,815,041

0 225 233 28,058 20,789 21,865 839 2,070 1,870 6,944 6,466 6,315 10,786 8,331 8,426 195,383 167,158 167,943 1,031 1,414 1,462 51 3 866 318,679 271,904 255,976 1.5 -14.7 -5.9 439,195 479,625 434,933 449,391 9.2 -9.3 3.3 1,750,310 1,988,999 1,978,385 2,264,468 13.6 -0.5 14.5

India's new vehicle market: prospects to 2015

automotiveworld.com

Market forecasts

18

Table 15: Market share
Group BMW Daimler Fiat Force Ford GM Hindustan Honda Hyundai Mahindra Nissan Porsche Renault Suzuki Tata Toyota VW VW VW Other PC Total Force Hindustan Mahindra Piaggio Tata Other LCV Total Ashok Leyland Asia Motor Works (AMW) Mercedes-Benz Eicher Force Mahindra Sumitomo Tata Volvo Other HCV Total Ashok Leyland Asia Motor Works (AMW) Mercedes-Benz Eicher Force Mahindra Mazda Tata Volvo Other Force Hindustan Mahindra Piaggio Tata Other Brand BMW Mercedes-Benz Fiat Force Ford Chevrolet Hindustan Honda Hyundai Mahindra Nissan Porsche Renault Maruti Tata Toyota Audi Skoda VW Other 2006 0.0 0.1 0.2 0.6 3.2 2.7 1.2 4.3 14.2 6.7 0.0 0.0 0.0 45.5 16.7 3.7 0.0 0.9 0.0 0.0 100 4.9 0.2 28.2 0.0 66.7 0.0 100 22.9 0.0 0.0 8.0 0.2 1.9 3.3 63.4 0.3 0.0 100 2007 0.1 0.2 0.2 0.5 2.6 3.9 0.8 4.0 13.3 7.8 0.0 0.0 0.0 47.1 15.1 3.6 0.0 0.8 0.0 0.0 100 5.7 0.0 30.1 1.6 62.5 0.0 100 23.7 0.0 0.0 8.8 0.3 2.2 3.4 61.3 0.3 0.0 100 2008 0.2 0.2 0.3 0.4 1.9 4.3 0.7 3.5 15.9 7.9 0.0 0.0 0.0 45.2 15.0 3.4 0.0 1.0 0.0 0.2 100 4.4 0.0 30.0 5.9 59.7 0.0 100 23.3 0.8 0.1 7.6 0.8 2.4 3.1 61.5 0.5 0.0 100 2009 0.2 0.2 1.3 0.3 1.6 3.8 0.5 3.4 16.0 8.3 0.0 0.0 0.0 46.1 14.3 3.0 0.1 0.8 0.1 0.1 100 3.7 0.1 33.1 5.2 57.9 0.0 100 17.1 1.3 0.1 8.5 0.7 2.5 3.3 65.6 0.6 0.3 100 2010 2011 (prelim) (proj.) 0.2 0.2 1.3 0.4 3.5 4.7 0.8 3.1 15.6 6.8 0.5 0.0 0.0 43.5 13.4 3.9 0.1 0.8 1.1 0.1 100 5.0 0.1 37.8 3.4 53.6 0.0 100 21.7 1.4 0.1 9.0 0.6 2.2 2.8 61.7 0.4 0.0 100 0.2 0.2 1.2 0.3 3.7 5.0 0.8 3.2 14.7 6.6 1.7 0.0 0.3 41.2 13.0 5.2 0.1 0.9 1.4 0.1 100 5.2 0.1 36.6 3.5 53.2 1.3 100 21.7 1.4 0.3 9.0 0.7 2.1 2.8 61.1 0.6 0.3 100 2012 (proj.) 0.2 0.2 1.4 0.3 3.5 5.1 0.8 3.7 14.3 6.2 1.9 0.0 0.9 40.2 12.8 5.5 0.1 0.9 1.7 0.3 100 5.3 0.1 36.6 3.5 52.3 2.1 100 22.1 1.3 0.5 9.6 1.0 2.1 2.8 59.6 0.6 0.4 100 2013 (proj.) 0.2 0.2 1.4 0.3 3.5 5.3 0.7 3.8 14.4 6.0 2.1 0.0 1.1 39.2 12.8 5.7 0.1 0.9 1.9 0.3 100 5.4 0.1 36.8 3.5 51.4 2.9 100 22.1 1.3 0.8 9.7 1.2 2.1 2.8 58.6 0.9 0.5 100 2014 (proj.) 0.2 0.2 1.5 0.3 3.6 5.4 0.7 3.7 14.6 5.9 2.4 0.0 1.2 38.6 12.8 5.5 0.1 0.9 1.9 0.4 100 5.5 0.1 36.2 3.5 50.7 4.0 100 21.5 1.2 1.1 10.1 1.4 2.1 2.7 58.1 1.1 0.6 100 2015 (proj.) 0.2 0.3 1.5 0.3 3.7 5.5 0.7 3.6 14.8 5.6 2.6 0.0 1.3 38.2 12.9 5.5 0.1 0.9 1.9 0.5 100 5.3 0.1 35.9 3.5 50.8 4.4 100 20.8 1.2 1.2 9.8 1.7 2.1 2.7 58.5 1.2 0.8 100

India's new vehicle market: prospects to 2015

automotiveworld.com

Outlook

19

OUTLOOK
Passenger vehicles
Following the 31% rise in sales of new passenger vehicles during 2010, we are expecting growth to remain positive in 2011 but for the rate of increase to slow. The principal causes of this slower growth are anticipated to be: higher finance rates; in January 2011 Reserve Bank of India raised interest rates for the 7th time since beginning of 2010, and further rises are expected to counter the increase in inflation - about 60% of new car purchases require finance; ◆ higher running costs (fuel etc.); ◆ higher purchase prices as OEMs will have to reflect higher input costs in the vehicle prices; ◆ it is also possible that excise duty for small cars will rise from its current level of 10% back to its pre-credit crisis level of 12% in 2011-12.


Despite these constraints, the Indian economy is expected to remain buoyant and this should enable car demand to continue rising through to 2015 at which point we expect sales to be 1 million units higher than in 2010. The growing hunger for vehicle ownership in a country with a population of 1.2 billion means that over the long term, this is almost certain to become one of the world’s largest markets for new vehicles.

Commercial vehicles
We expect a continuing high level of demand in the early part of 2011 but the industry faces increasing headwinds, notably: Rising interest rates: in January 2011, the Reserve Bank of India raise interest rates for the 7th time since early 2010; further rises are expected. Over 90% of new HCVs are bought with credit; ◆ Higher running costs (fuel prices, road tolls, finance costs etc.); ◆ Increased vehicle purchase prices due to higher input costs and new emission standards.


Nevertheless: ◆ Real GDP growth is forecast (by the OECD) at 8.0% in 2011, rising to 8.5% in 2012; ◆ Freight rates remain sufficiently high for most operators to remain profitable; ◆ Higher running costs can encourage the purchase of new vehicles offering lower overall cost per t/km; There is legislative pressure to ban older trucks and buses (>15 years).

India's new vehicle market: prospects to 2015

automotiveworld.com

Appendix

20

APPENDIX 1: DEFINITIONS
SIAM: Society of Indian Automotive Manufacturers; SIAM is an industry association representing 46 vehicle and vehicular engine manufacturers in India. PC: Passenger car LCV: Light commercial vehicle, gross vehicle weight (GVW) up to 5 tonnes HCV: Heavy commercial vehicles, GVW 5 tonnes and over MPV: Multi-purpose vehicle (minivan) Data reporting: Unless stated, all data is calendar year data. Vehicle sales data for 2010 is presented here as “preliminary” data; we anticipate sufficient accurate brand-level and model-level data for calendar year 2010 to be available from March 2011.

APPENDIX 2: EMISSION STANDARDS
A programme of improving emission standards for new buses and trucks (GVW >3.5t) was started in 1992. Since 2000 the regulations have been based on EU standards though still referred to as Bharat Stage I, Stage II etc. The introduction of new standards is typically phased. Bharat II and III were first implemented in Delhi and up to 12 other major cities. Bharat III was due to apply nationwide in April 2010 but was deferred to October 2010 due to the non-availability of suitable fuel. Similarly Bharat IV came into force for Delhi and 11 other cities in 2010 but is not expected to apply nationwide until 2014. Table 16: Emission Standards for diesel trucks and buses in India
Year 1992 1996 2000 2005 2010 2010 (selected regions) 2014 2015 (est. selected regions) Standard Bharat I / Euro 1 Bharat II / Euro 2 Bharat III / Euro 3 Bharat IV / Euro 4 Bharat IV / Euro 4 Bharat V / Euro 5 CO (g/kWh) 17.3-32.6 11.2 4.5 4 2.1 1.5 1.5 1.5 HC (g/kWh) 2.7-3.7 2.4 1.1 1.1 0.66 0.46 0.46 0.46 NOx (g/kWh) 14.4 8 7 5 3.5 3.5 2 Particulates (g/kWh) >85kW 0.36 <85kw 0.62 0.15 0.1 0.02 0.02 0.02

APPENDIX 3: FORECASTING PASSENGER CARS
Methodology
Our approach to forecasting car demand is to consider essentially the same set of variables for each market and assess the impact of each variable. Variables include: economic indicators, principally income per capita; fuel prices; ◆ interest rates;
◆ ◆

India's new vehicle market: prospects to 2015

automotiveworld.com

Appendix

21

finance availability; level of private and business purchases ◆ taxes and regulatory changes; ◆ vehicle prices; ◆ model launches; ◆ structure of the parc.
◆ ◆

The weighting of the different variables varies not only between markets but also within the same market over time. For example in a young market such as India the primary driver currently is economic growth which is generating incremental demand. In mature markets the majority of new car sales reflect replacement demand. It should be noted that not all variables are available as a neat data package with information which is up-to-theminute as at the forecast date. There is often a significant lag before data is available - it can be over a year in India's case - or data might only be available as a few discrete snippets of information rather than a continuous time-series.

APPENDIX 4: FORECASTING COMMERCIAL VEHICLES
Methodology
Figure 1: The fundamentals of truck demand

Freight Demand

Market Share

Rail

Road

Other

Existing Capacity

Efficiency Gains / Loses

Required Capacity

India's new vehicle market: prospects to 2015

automotiveworld.com

Appendix

22

Long term developments
An outline of fundamental drivers of truck demand is shown in Figure 1. This helps to analyse the historical development of the truck market as well as to examine and quantify the major trends which will determine future truck demand.

Freight demand
Truck demand is fundamentally driven by the Figure 2: EU freight by mode Market share levels of demand for goods transport (by all modes). The choice of mode for goods transport is typically between road and rail, although the preferred choice for some goods or some regions will be transport by sea, inland waterways, pipeline or air. The aggregate freight transport figure tends to follow the pattern of GDP growth quite closely, though changes in the composition of GDP, trade patterns, lifestyle/technology changes and political/legislative factors can all influence the relationship. Having established the aggregate demand for freight transport, this is then subdivided to reflect the market shares of the road haulage industry, rail and other transport modes. In many regions the road haulage industry’s growing market share has enabled it to grow at rates in excess of GDP for a number of years. For example Figure 2 shows the market share achieved by the road transport industry within the EU grew from 52% in 1970 to 71% in 2000. This increase occurred over a period when total freight volumes rose by 93%; thus the increasing market share of road transport led to a 2.6-fold volume increase over this period.

Existing capacity
Once the level of road haulage demand is established, consideration is given to any changes in the pattern of demand (e.g. increases in international traffic and just-in-time deliveries or the bans on trucks in city centres). The existing vehicle parc is then analysed for its capacity to meet the demand (including segmentation changes and expected efficiency gains or losses) and the level of new registrations is calculated on the basis of the replacement vehicles and incremental vehicles necessary to achieve the required capacity. In the short term, deviations from these long term sales trends are caused by factors such as legislative changes, haulage industry profitability and pricing actions by manufacturers.

Data availability
When analysing less well-documented markets, this approach to forecasting has to be adapted to reflect the level of detail available.

India's new vehicle market: prospects to 2015

automotiveworld.com

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close