THE INDIAN AUTOMOBILE INDUSTRY

A PERSPECTIVE

Automobile Industry in India
Ø Automobile Industry in India has witnessed
a tremendous growth in recent years.
Ø Come a long way since the first car ran on
the streets of Bombay in 1898.
Ø It employs more than 10 million people.
Ø After independence Indian automobile
industry was plagued by unfavourable
government policies. All it had to offer in
the passenger car segment was a 1940s
Morris model called the Ambassador and
a 1960s Suzuki-derived model called the
Maruti 800.
Ø The automobile sector in India
underwent a metamorphosis as a
result of the liberalization policies
initiated in the 1991
Ø Measures such as relaxation of the
foreign exchange and equity
regulations, reduction of tariffs on
imports, and refining the banking
policies played vital role.
Ø after the sector opened to foreign
direct investment in 1996 global
major moved in.
Ø Matured in last few years and offers
Today Scenario
1) India is on every major global
automobile player's radar.
2) Indian automobile industry is also
fast becoming an outsourcing hub for
automobile companies worldwide, as
indicated by the zooming automobile
exports from the country.
3)Due to rapid economic growth and
higher disposable income it is
believed that the success story of the
Indian automobile industry is not
going to end soon.
4)Today, Hyundai, Honda, Toyota, GM, Ford
and Mitsubishi have set up their
manufacturing bases in India
Major characteristics of Indian automobile
sector
Ø Second largest two-wheeler market in
the world.
Ø Fourth largest commercial vehicle market
in the world.
Ø 11th largest passenger car market in the
world
Ø Expected to become the world's third
largest automobile market by 2030,
behind only China and the US.

Indian automobile sector-A booming
market
Ø Allowance of 100% FDI in 2002 made the
industry easily attractive for the global
players. Japanese, Korean, European, and
American OEMs entered the Indian
market and added more than 1 Million
four-wheelers during 2005-06.
Ø The production of 2-wheelers grew at a
CAGR of 14.6% from FY2001 to FY 2006.
In passenger car segment, rise in
disposable incomes has opened the
roads for luxury cars too in India.
Key findings
 It is expected that per head disposal income in India will grow at
CAGR of 12.11% from fiscal year (FY) 2007 to FY 2010. It is likely
to boost purchasing powers of population, and consequently, the sale of
motorcycles and compact cars will increase.
In commercial vehicles segment, light commercial
vehicles are expected to register a higher growth rate than the heavy
and medium commercial vehicles from FY2007 to FY 2010.
India had the lowest penetration rate of motorcycles in comparison to
Indonesia, Thailand and Malaysia in 2005, indicating good growth
prospects for the motorcycle manufacturers.
Car stock per 1000 population is expected to increase at a CAGR of
9.14% during the forecasted period from FY2007 to FY2010. * New
passenger car registration is expected to grow at a CAGR of 11.41%
during the forecasted period.
 A U T O M O B ILE

PA S S E N G E R C O M M E R C IA L
2 W H E E LE R 3 W H E E LE R
V E H IC LE V E H IC LE

I. C . V . M .C .V. H . C . V.

M O T O R C YC LE SC O O TER S S C O O T E R E TT E S M O PE D S
Segment wise market share…

Growth Rates of different segm ents

23.5
25
20

4 year CAGR
14.3 14 14.2
15 11.3
10
5
0
Commercial Passenger T wo T hree total
Vehicles Vehicles wheelers wheelers Automob iles
Segm ents

•The industry has not experienced much change in its structure over the last 6
years
•Two- wheelers form the major share of domestic sales
•Passenger vehicles lead the exports market(57.4%)
•2 wheelers form the bulk of exports as well, but are losing share to Passenger
vehicles
•The growth in the two wheeler market is driven by the motorcycle market and
is expected to grow at 14-15 % YOY
Key players
Ø Commercial vehicles
 TATA Motors, Ashok Leyland, Swaraj
Mazda,Mahindra & Mahindra ,Force motors,
Eicher Motors
Ø Passenger vehicle
 TATA Motors, Maruti Udyog, Honda Motors, Toyota,
Skoda, Mahindra & Mahindra, Daimler Chrysler,
Hindustan Motors.
Ø Two Wheeler
 Hero Honda, Bajaj Auto, Honda Motors, TVS Motors,
Yamaha , Kinetic Motors
Ø Three Wheeler
 Bajaj Auto, Piaggio India

 C O N C EPT C A R S

TA TA E le g a n te In d ig o A d ve n t

A ra i co u p e

TA TA In d iva
C ro ss O ve r
Market share of two wheelers

Others, 5.8%
Yamaha, Honda
3.8% Motors, 8.5%

TVS Motors,
17.7%

Hero Honda,
39.8%

Bajaj Auto,
24.4%
Passenger vehicles market share

Others, 5.73
Honda, 5.33

Tata Motors,
17.19
Maruti, 50.37

Hyundai, 19.17
 Trends in the automobile sector…
Production of automobiles
Domestic Sales of automobiles
10 CAGR 15 . 4 % 8.5 CAGR 14 . 2 %
10
million numbers

8 7.2 7.9

million numbers
6.3 8 6.8
5.3 5.9
6 4.8 6 4.6
5.2

4
4
2
2 0
2000-01 2001-02 2002-03 2003-04 2004-05
0
2000-01 2001-02 2002-03 2003-04 2004-05

Exports of automobiles

•Domestic Sales have been growing strongly 0.7 0.63

CAGR 39 %
•Exports have nearly tripled in the last 5
0.6

million numbers
0.48
years 0.5
0.4 0.31
•Largest three wheeler market in the world 0.3
0.17 0.18
0.2
•4th largest passenger vehicle in Asia 0.1
0
•4th largest tractor in the market 2000-01 2001-02 2002-03 2003-04 2004-05

•5th largest commercial vehicle market in the

world
 KEY ENABLERS KEY CHALLENGES
•
•Cost Pressure
•Favorable Demographics •High Expectations
•Improving income curve •Inadequate Infrastructure
•Reducing interest rates Development

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
•Other measures
•
THANKS YOU