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CRISILResearch - Auto and Auto Ancillary Industry - ACMA
CRISILResearch - Auto and Auto Ancillary Industry - ACMA
1
Opening up of the economy
2
Challenges under the hood
• GDP growth projected at 7.8% next fiscal, with risks tilted to the downside
– Hinges on infrastructure-led capex by government and stirring of private capital expenditure (capex)
– Private consumption remains the weak link owing to reduced direct fiscal policy support
• Upside to inflation likely to crimp monetary policy space
– Inflation based on the Consumer Price Index (CPI) is expected to average 5.4% next fiscal
3
Global growth to moderate amid rising risks
GDP growth (%)
3.2 3.2
2.6
4.8
5.7 5.2
1.9
8.1 • Global growth expected to slow amid the
Russia-Ukraine strife. Europe to be hit
4
Private consumption weak link in the demand story
PFCE growth trailing GDP growth Private consumption a laggard
10.0 8.9 FY22 over FY20 (%)
8.0 14.0
7.6
6.0 11.9
12.0
4.0
9.9
2.0 10.0
8.6
0.0
0.0
Real PFCE growth (%) Real GDP growth (%) M X GFCE GFCF GDP PFCE
PFCE: Private final consumption expenditure; M: Imports; X: Exports; GFCE: Government final consumption expenditure; GFCF: Gross fixed capital formation
Source: National Statistical Office, CRISIL
• Economy is 1.8% above the pre-pandemic level (fiscal 2020) in the current fiscal
• While other demand-side drivers have recovered rapidly, private consumption expenditure growth is still subdued
5
Why is private consumption weak?
160.0
140.0
Tepid consumer sentiment
• The Reserve Bank of India’s (RBI) consumer
120.0
109.6 confidence survey for the current period
100.0 103.0 gives pessimistic vibes
Mar-18
Mar-19
Mar-20
Mar-21
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
May-17
Nov-17
May-18
Nov-18
May-19
Nov-19
May-20
Nov-20
May-21
Nov-21
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
• High inflation continues to create headwinds;
urban poor hit harder (more about this in the
inflation segment)
Current Situation Index Future Expectations Index
6
Exposure to the Russia-Ukraine crisis
Low share in India’s trade (imports + exports) Direct impact
• Higher international commodity prices (energy, edible
oils, agricultural products, and metals)
8
Macroeconomic outlook
FY18 FY19 FY20 FY21F FY22F FY23F
1 Real GDP growth (%) 6.8 6.5 3.7 -6.6 8.9* 7.8
2 Consumer price inflation (%) 3.6 3.4 4.8 6.2 5.5 5.4
5 Fiscal deficit/ GDP (%) 3.5 3.4 4.6 9.2 6.9^^ 6.4#
6 10-year G-sec yield (March-end) 7.6 7.5 6.2 6.2 6.9 7.1^
F: Forecast. *NSO second advance estimate. ^With upward risk, ^^RE, #BE
Source: NSO, RBI, CRISIL
9
Consumption-linked and construction sectors to drive revenues next fiscal
High base to restrict incremental growth for the commodities vertical during the year
Share% Verticals FY22 industry revenue as % of FY19 Industry revenue recovery in FY22 vs FY19 FY23 industry
FY22 revenue as %
Leading sectors Laggard sectors of FY22
Lower-priced variants underperformed premium variants Food and refreshments growth moderates on a high base
personal
Rs 70K
care
High growth
Up to 12% (4)% (26)% (27)% (31)%
Scooters
Marginal de-growth
22% 1% (15)% (18)% (1)%
More than
Rs 70K De-growth
12
Large companies drive capacity addition in most sectors
Utilisation levels for PVs, TWs and tractors to be below previous peaks due to supply-chain constraints and muted recovery
(mn units) Passenger vehicles (%) (mn units) Two-wheelers (%) (mn units) Tractors (%)
7.0 80% 35 90% 1.4 90%
6.0 30 1.2
80% 80%
70%
5.0 25 1.0
2.0 10 0.4
50%
50% 50%
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23P
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23P
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23P
Top 2 (LHS) Others (LHS) Utilisation (RHS) Top 3 (LHS) Others (LHS) Utilisation (RHS) Top 2 (LHS) Others (LHS) Utilisation (RHS)
Utilisation levels for infrastructure-linked companies have rebounded strongly, in line with economic recovery
(MT) Refining (%) (MT) Steel (%) (mn units) Commercial vehicles (%)
(MT) Cement (%)
300 110% 180 100% 1.6 80%
700 80%
160 1.4
250 100% 90% 600
140
70% 1.2 70%
90% 500
200 120 80%
1.0
80% 100 400
150 70% 60% 0.8 60%
70% 80
300
0.6
100 60 60%
60% 200
40 50% 0.4 50%
50 50%
50% 20 100 0.2
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23P
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22E
FY23P
Capacity (LHS) Utilisation (RHS) Large (LHS) Others (LHS) Utilisation (RHS) Top 2 (LHS) Others (LHS) Utilisation (RHS)
Large (LHS) Others (LHS) Utilisation (RHS)
Note: Utilisation levels are provided for industry in the coloured space; for CV, it’s for the top four players accounting for more than ~80% of volumes; CV-commercial vehicle; PV-passenger vehicle; TWs-Two-wheelers; MT-million
tonne Source: SIAM, TMA, Industry, CRISIL Research
15
Segmental shift
Higher segmental shift visible in Passenger vehicles and three-wheelers
PV 2W
100% 6% 6% 6% 5% 4% 4% 100% 5% 4% 4% 4% 4% 4%
90% 90%
80% 25% 28% 28% 34% 80%
39%
70% 48%
70%
60% 63% 62% 64% 64% 66% 67%
60%
50%
50%
40%
69% 66% 66% 40%
30% 61% 57%
20% 48% 30%
10% 20% 33%
32% 32% 32% 30% 30%
0% 10%
FY17 FY18 FY19 FY20 FY21 FY22 (Apr- 0%
Feb) FY17 FY18 FY19 FY20 FY21 FY22 (Apr-Feb)
Passenger Cars Utility Vehicles(UVs) Vans Scooter/ Scooterettee Motorcycle/Step-Throughs Mopeds
CV 3W
100% 3% 4% 100%
14% 10% 9% 12%
90% 90% 21% 19% 18% 18%
27% 30% 30%
80% 80% 38%
36% 35% 26%
70% 36% 70%
60% 60%
50%
50%
40%
70% 40% 79% 81% 82% 82%
30% 62% 66% 70%
51% 55% 56% 30% 62%
20%
20%
10%
0% 10%
FY17 FY18 FY19 FY20 FY21 FY22 (apr- 0%
Dec) FY17 FY18 FY19 FY20 FY21 FY22 (Apr-Feb)
LCVs M&HCVs Buses Passenger Carrier Goods Carrier
105%
100%
0%
Jan-20 92% 7% Jan-20 94% 5%
Feb-20 91% 8% Feb-20 95% 5%
Mar-20 88% 11% Mar-20 96% 4%
Apr-20 88% 12% Apr-20 1% 91% 9%
May-20 100% 0% May-20 79% 0%
Jun-20 100% 0% Jun-20 89% 2%
Jul-20 100% 0% Jul-20 84% 4%
90% 1%1% 0%20%9%12%
84% 6%
Oct-20 93% 5% Oct-20 85% 7%
Diesel
Nov-20 79% 12% Nov-20 86% 7%
Dec-20 86% 13%
Petrol
Dec-20 85% 6%
Electic
Feb-21 74% 5%
Feb-21 79% 8%
CNG
Mar-21 86% 5%
Mar-21 77% 9%
Apr-21 81% 3%
CNG
Apr-21 76% 10%
May-21 80% 1%
May-21 82% 8%
Jun-21 81% 11%
Others
Aug-21 86% 4%
Fuel mix of vehicle registrations for Buses
Oct-21 82% 8%
Oct-21 66% 19%
12%
11%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
100%
100%
0%
0%
Jan-20 50% 30% Jan-20 100%
Feb-20 52% 28% Feb-20 100%
Mar-20 63% 20% Mar-20 100%
Apr-20 64% 26% Apr-20 100%
May-20 47% 15%
3%
May-20 100%
Jun-20 53% 25% Jun-20 100%
Jul-20 58% 23% Jul-20 100%
Aug-20 59% 22% Aug-20 100%
Diesel
Sep-20 59% 19% Sep-20 100%
Oct-20 57% 23%
Diesel
Oct-20 100%
Nov-20 56% 26%
Petrol
Nov-20 100%
Dec-20 56% 27%
1% 1% 1% 1% 1% 1% 1%
Dec-20 100%
Petrol
CNG
Jan-21 100%
Feb-21 49% 40%
Feb-21 99%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Electric
1% 1% 2%
Mar-21 99%
1% 0%
Electric
Apr-21 47% 35%
Apr-21 99%
1% 0%
May-21 100%
Jun-21 45% 41%
Others
Jun-21 100%
Jul-21 39% 45%
Jul-21 99%
Aug-21 34% 49%
Fuel mix of vehicle registrations for 3W
Fuel mix of vehicle registrations for 2W
Aug-21 99%
Sep-21 28% 57%
Sep-21 98%
Oct-21 25% 61%
Oct-21 98%
Nov-21 26% 59%
Nov-21 98%
Dec-21 25% 59%
Dec-21 98%
Jan-22 21% 58%
Jan-22 97%
Feb-22 21% 56%
3% 4% 5% 5% 4% 4% 6% 5% 5%
Feb-22 97%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
1% 0% 0% 1% 1% 2% 2% 2% 2% 3% 3%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
21
0
50
100
150
200
250
300
350
400
Apr 23
0
May 35
41
Jun 143
113
Jul 178
201
Aug 203
234
Sep 214
293
FY21
Oct 286
334
Nov 332
287
Dec 299
277
Jan 315
304
Retail
Retail vs off-take
Feb 285
309
PV
Apr 232
286
May 96
103
Jun 205
255
Jul 296
264
Aug 288
232
Sep 264
160
FY22
Oct 254
226
Nov 269
216
Dec 272
219
Note: Retail numbers are estimated, Offtake numbers include Tata Motors sales
Jan 285
254
Feb 264
263
Millions
0.0
0.5
1.0
1.5
2.0
2.5
Apr 0.4
0.0
May 0.2
0.3
Jun 0.9
1.0
Jul 1.0
1.3
Aug 1.1
1.6
Sep 1.2
1.8
FY21
Oct 1.2
2.1
Nov 1.7
1.6
Dec 1.6
1.1
Jan 1.3
1.4
Retail
Feb 1.2
1.4
2W
Mar 1.3
1.5
Apr 0.9
Offtake
1.0
May 0.4
0.4
Jun 0.9
1.1
Jul 1.1
1.3
Aug 1.0
1.2
Sep 1.1
1.5
FY 22
Oct 1.0
1.5
Nov 1.4
1.1
Dec 1.1
1.0
Jan 1.0
1.1
Feb 1.0
1.0
-
100
150
200
300
350
400
450
250
50
170
Q1
152
161
Q2
202
FY18
198
Q3
221
238
Q4
282
229
Q1
230
213
Q2
FY19
229
Q3
236
Q4
284
Retail
Retail vs off-take
222
Q1
417
CV
194
Q2
167
Off-take
FY20
197
Q3
195
274
Q4
147
30
Q1
32
80
Q2
134
FY21
140
Q3
193
172
Q4
209
100
Q1
106
157
Q2
166
FY22
167
Q3
195
Thousands
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
May-20 1.6
2.4
Jun-20 9.1
10.3
Jul-20 11.5
12.7
Aug-20 13.5
14.5
Sep-20 19.8
18.6
Oct-20 17.8
26.2
Nov-20 19.3
23.6
Dec-20 21.5
22.1
Jan-21 24.9
26.3
Retail
Feb-21 25.7
27.3
3W
Mar-21 28.7
31.9
Apr-21 16.8
Offtake
13.7
May-21 3.7
1.3
Jun-21 10.0
7.9
Jul-21 19.1
17.9
Aug-21 20.6
23.2
Sep-21 23.8
29.2
Oct-21 24.5
31.8
Nov-21 26.3
22.5
Dec-21 24.8
28.1
Jan-22 27.0
24.1
Feb-22 25.9
27.0
PV industry continues to grapple for stock
Vehicle segment Normal inventory in days Current inventory levels*
NOTE:* Inventory level as on end of Dec 2021, Inventory units have been calculated using last 12 months sales
Source: Industry, CRISIL Research
Opportunities & challenges in the medium term
• Chip supply
26
Forecast
27
Domestic automobiles forecast- FY23 and FY26
CAGR – FY21 to
Segment FY20 FY21 FY22E FY23P FY26P
FY26
(million units) Volume Volume Y-o-Y Growth Volume Y-o-Y Growth Volume Y-o-Y Growth Volume Growth(%)
Motorcycle 11.21 10.02 (11)% 8.9-9.1 (11)-(9)% 9.2-9.5 2-6% 12.1-12.3
Total PV (million
2.77 2.71 (2)% 3.0-3.04 10-12% 3.3-3.4 9-11% 4.1-4.3 7-9%
units)
Total 3W (‘000 units) 637 216 (66)% 255-260 18-20% 377-382 46-48% 590-610 22-24%
28
Source: CRISIL Research
Electrification
TCO for PV, 2W and 3W
ICE PV Electric PV 8.0 7.2 ICE 2W Electric 2W
TCO per km
20.6 5.0
18.4 4.3
20.0 23.0 3.9
20.9 16.7 3.7
4.0
19.4
15.0 18.2 17.3
3.0 3.5
10.0 2.0 2.5
2.0
5.0 1.0 1.7
0.0 0.0
15000 18000 21000 24000 27000 5000 10000 15000 25000 35000
Kms
CNG 3W Electric 3W
18.0 16.5
16.0
16.8
14.0 EV penetration in sales FY25 FY30
12.0 10.2
10.0 8.0
3-wheelers ~30% >50%
8.0
6.0
9.2 6.3
5.6 2-wheelers ~12-15% >35%
6.6
4.0
4.6
Passenger vehicles ~3-5% ~20%
2.0 3.7
0.0
5000 10000 15000 25000 35000
30
Source: SIAM, CRISIL Research
Note: PV-Passenger vehicle, 2W- Two-wheeler, CV – Commercial vehicle, 3W – Three wheelers
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