Professional Documents
Culture Documents
OVERVIEW
The past two years has shown some strain for the industry. The
industry grew at 6.63% in FY13 and projection for FY14 is only 1-2%
15.07
4.66
2.95
77.32
4 8
Passenger Vehicles
Commercial Vehicles
Three Wheelers
Two Wheelers
Raw Materials
Manufacturing
3
79
Labour
Sales & Distribution
Other Costs
10
INDUSTRY CLUSTERS
The automobile industry is concentrated in 4 key regions
North: Delhi-Gurgaon-Faridabad
West: Mumbai-Pune-Nashik-Aurangabad
East: Kolkata-Jamshedpur
South: Chennai-Bengaluru
Source: ACMA
MARKET SEGMENTS
Motorcycles
Two Wheelers
Scooters
Mopeds
Automobile
s
Goods carriers
Three Wheelers
Passenger
carriers
Passenger cars
Passenger
Vehicles
Utility vehicles
Multi purpose
vehicles
Commercial
Vehicles
Tractors
Light
commercial
vehicles
Medium
commercial
vehicles
Heavy
commercial
vehicles
VALUE CHAIN
Rural Demand
The scope for rural penetration is huge as only 32 per 1000 inhabitants have 2W.
Good monsoon, increased penetration of the players in terms of dealership network
will fuel growth
Favorable demographics
Around 33% of Indias population of 1.2 billion belongs to the age bracket of 20-40
years.
KEY CONCERNS
Market Share in
2W:
5.7
MotorCycles
Scooters
73.1
Mopeds
Bajaj
Hero Moto
Honda
TVS
Yamaha
Others
Market share in
Scooters:
2.2
15.2
11.8
19.8
Hero
HMSI
TVS
51.0
Yamaha
Suzuki
13,409,150
12,000,000
10,000,000
13,797,095
11,774,243
9,371,062
8,000,000 7,437,754
6,000,000
4,000,000
2,000,000
0
2008-09
2009-10
2010-11
2011-12
2012-13
The Domestic sales for two wheelers have grown at a CAGR of 13.8% over
the past five years from 2008-09 to 2012-13
Two wheelers segment registered a modest growth of only 2.9% in FY13
Source: SIAM
Capacity Utilisation
Capacity Utilisation
120%
100%
80%
98%
87%
83%
60%
57%
56%
Capacity
Utilisation
40%
20%
0%
Hero
Bajaj
Honda
TVS
Others
As evident from the graph, most of the players have not been able to use
their plants to their optimum level. This is due to the overall slowdown in
the industry. Only Honda Motorcyles have been able to utilise its plant by
more than 90%
Source: SIAM
1975111
1531657
1500000
1000000
1960938
1004212
1140414
Export Sales Trend
500000
0
2008-09
2009-10
2010-11
2011-12
2012-13
6.9
7.5
8.2
0.6
10.8
Bajaj
Hero
65.9
HMSI
Yamaha
Others
TVS
OUTLOOK
But despite the economic slowdown, Indian 2W industry has done well
compared to other major markets of the world. Also, in the long term, rise in
rural demand, increasing urbanization, increasing income, shrinking
replacement cycles, increasing fuel efficiency, favourable demographics,
increasing women consumers boosting scooter demand, rise in exports, and
rise of electric two wheelers will drive the 2W industry to grow at CAGR of
11-12% in the next five years.
India is the worlds foremost producer, consumer and exporter of threewheelers (3W) with domestic sales of 5.38 lakh units & exports of 3.03 lakh
units in the financial year ending March 31, 2013
The domestic demand has grown only 5% whereas the exports have
slumped 16% Y-o-Y.
The tension in Middle East and Sri Lankan governments steep tax
imposition were the main reason for this.
The 3W industry has witnessed11% CAGR volume growth over the last 5
years driven by moderate domestic growth (~9% CAGR) and slowing
exports (~11% CAGR) due to international factors
DRIVERS
Greater reach within the area compared to other public transport means
like metro, buses.
Ideal for congested roads of India particularly because of increasing
urbanization.
Inadequacy of public transport to server the last mile transportation needs
of population.
Feasibility of carrying goods from low accessible areas like Tier 3 cities.
Low cost of ownership compared to taxis and small commercial vehicles.
Self-employment opportunity for youth.
Low operating costs both for passenger and goods carriers.
CONCERNS
With the successful launch of four-wheeled Small Commercial Vehicles
(mainly Tata ACE), the industry dynamics have altered especially for the
cargo segment, considerably over the last five years.
Safety concerns due to an open tubular structure in passenger carriers as
well as odd number of wheels which add to instability
MARKET SHARE
Passenger Carriers
The Passenger Carrier segment is
dominated by Bajaj Auto followed by
Atul Auto; 2% Others; 1%
Mahindra & Mahindra; 6%
Piaggio and TVS
TVS; 7%
Piaggio; 19%
Bajaj; 64%
Goods Carriers
Bajaj; 3%
Scooters India; 8%
Atul Auto; 15%
Mahindra & Mahindra; 21%
Piaggio; 53%
SALES TREND
Total 3W sales have grown at a CAGR 11% over the past fIVE years from
2008-09 to 2012-13
Export contribution has also risen from 30% in 2008-09 to 36% in 2012-13
with Bajaj Auto being the largest exporter of three wheelers.
875034
841379
795992
45%
41%
40%
35%
30%
30%
613606
Source: SIAM
25%
36%
34%
28%
20%
15%
10%
5%
FY10
FY11
FY12
FY13
0%
FY09
FY10
FY11
FY12
FY13
OUTLOOK
The sector performed badly on the export front due to
tensions in Egypt and sudden increase in the import tariffs in
Sri Lanka. Exports have risen 47% in Q1FY14. This trend will
not be continued and the exports have started to fall back to
the original levels. The situation will continue till stability is
achieved in Egypt, after which the sales will continue to grow.
In the domestic market, the sales are tapering down due to
slowing demand. Although many cities have issued fresh
licenses, the rising fuel bills are curtailing the demand. This
has prompted Bajaj to launch fuel efficient models in the
passenger segment.
GROWTH DRIVERS
KEY CONCERNS
The decontrol of petrol has forced the customer to stay away from petrol
vehicles. However, even vehicles running on diesel and CNG are facing the
brunt of the partial decontrol and increase in prices. This has put the
customer in a dilemma as his running costs will substantially increase .
The industry is burdened with high excise duty on the UV category too, forcing
higher price on the consumer which has prompted the consumers to postpone
buying decision in anticipation of new UVs. The only UVs showing growth are
the newly launched products or old products relaunched as facelift whereas
the rest of the UV market has fallen 20%.
HUGE INVENTORIES
The inventories at the dealers end were at an average of 35-40 days locking
the manufacturer as well as the dealers capital. This has forced the OEMs to
have block closures, reduce temporary manpower, or even laying off excess
employees.
SEGMENTATION
CATEGORY
Micro
Mini
Compact
C1
C2
D
E
F
CRITERIA
<= 800cc
<=1000cc
1001cc to 1400cc
1401cc to 1600cc
1601cc to 2000cc
2001cc to 3000cc
3001cc to 5000cc
>5000cc
LENGTH (mm)
<=3200
3200 to 3600
3600 to 4000
4000 to 4250
4250 to 4500
4500 to 4700
4700 to 5000
>5000
UTILITY VEHICLES
There are now five sub-segments : UV1, UV2 and UV3 including UVs that cost up
to Rs 15 lakh. UV4 vehicles are the ones priced at Rs 15-25 lakh. UV5, the ones
price more than Rs 25 lakh.
MULTI-PURPOSE VEHICLES
One box (van/mpv) Omni, Venture, Versa
Two box (hatchback )Alto, Santro, i10, a star, Nano
Three box (sedan/saloon/notchback) - Manza, City, Fiesta, Dzire
Estate/station wagon Indigo Marina, Octavia wagon
SUV (sports utility vehicle) CRV, Safari,XUV500, Pajero
Semi notchback Octavia, Accent Viva
MARKET SHARE
Source: SIAM
Volkswagen; 3%
Others; 3%
Honda; 3% Renault; 2%
Ford; 3%
Maruti; 42%
TChevrolet;
ata; 9% 3%
Toyota;
7% 11%
Mahindra;
Hyundai; 15%
Toyota; 4% Others; 3%
Ford; 5%
Nissan; 18%
Hyundai; 48%
Maruti; 22%
Chevrolet; 4% Others; 1%
Chevrolet; 4%
Toyota; 4%
Ford; 4%
Tata; 9%
Hyundai; 21%
Maruti; 46%
Renault; 7%
Tata; 8%
Maruti; 15%
Mahindra; 48%
Toyota; 17%
SALES TREND
Source: SIAM
Domestic PV sales
3000000
2501542
2000000
2629839
2686429
2011-12
2012-13
2500000
UV
1500000
VANS
CARS
1000000
2000000
1951333
1500000 1552703
1000000
500000
500000
0
2008-09
2009-10
2010-11
2011-12
0
2008-09
2012-13
2009-10
2010-11
PV Exports
600000
554686
500000
446145
400000
300000
508783
444326
PV Exports
335729
200000
100000
0
2008-09
2009-10
2010-11
2011-12
2012-13
Source: SIAM
OUTLOOK
The Passenger Vehicles has seen Y-o-Y decline for 9 straight
months till July 2013
The Utility Segment was the only growing segment but its
growth is now curtailed due to increased excise duty, high
fuel prices and high interest rates.
Also labor strife at Maruti's Manesar plant which forced the
company management to shut the plant for more than a
month will have a bearing on the growth of this segment.
But in the long term, due to under penetrated market, rise
in per capita income, rural participation, increasing
proportion of exports, new OEMs participation, Indian PV
industry is poised to reach the level of 6 mn units from
current level of ~3 mn units
The CV industry is cyclical in nature as the demand depends on the pace of the overall
economic growth (GDP) and industrial activity in particular (IIP). Among segments, M&HCVs
tends to be more influenced by the macro-economic indicators than LCVs.
The current share of freight traffic in India through road is around 65%, which is much higher
when compared to other countries like US & China.
The emergence of a hub and spoke model has also lead to increase in the sub- 3.5 tonne
category which has seen a relatively stable growth than the sudden decline in the M&HCV
volumes.
GROWTH DRIVERS
KEY CONCERNS
SALES TREND
437,875
400,000
350,000
361,147
273,126
271,852
300,000
299,334
250,000
200,000
150,000
100,000
44,035
50,000
2010-11
50,268
38,861
2011-12
2012-13
OUTLOOK
The commercial vehicle industry has declined around
12% during April-July 2013. These low sales over an
already dismal last year performance shows the gravity
of the situation.
The segment sales are expected to remain in a freefall
till the government provides some support in the form
of an excise duty cut back, stable interest rates and
sound policies which will lift the overall economy.
A pickup in the mining activity will help increase the
sales in the M&HCV segment. The LCV segment, which
was doing reasonably well has also come under
pressure due to fuel rates and also high base.
TRACTORS - OVERVIEW
The Tractor industry has always been a barometer for the state of rural
economy in India. The growth drivers of tractor demand are the scarcity of
farm labor, increase in agri-credit flow and rise in non-agri usage of tractors.
The long-term driver is the support from the Government of India (GOI)
towards rural development and agri-mechanisation.
Although agriculture contributes only 14.1% to Indias GDP, its role remains
critical in Indian economy as it provides employment to 58.2% of the
workforce, which is why this sector remains a strong focus area for the
Government
MARKET SHARE
25.0
11.6 2.4
9.6
5.1
5.7
40.6
Escorts Ltd.
Others
International Tractors Ltd.
Johndeere
Mahindra & Mahindra Ltd.
New Holland India
TAFE
Major Players:
Mahindra & Mahindra
TAFE (Tractors and Farm Equipment Ltd)
Escorts
ITL (Sonalika)
John Deere
New Holland
Source: ICRA research reports
GROWTH DRIVERS
Improvement in monsoons
Rainfall is one of the major determinants of demand for tractors in India. India has
witnessed normal to above normal rainfall during the monsoons which would be a
growth driver for the industry.
600000
545108
500000
440208
400000
300000
590915
342820
200000
100000
0
2008-09
2009-10
2010-11
2011-12
2012-13
OUTLOOK
Manufacturing and export of small cars, multi-utility vehicles, two and three
wheelers, tractors, components to be promoted.
Care to be taken of negative like and rules of the country with current
negotiation of Free Trade Agreement and Regional Trade agreement with
countries like Thailand, Singapore, Malaysia, China, Korea, Egypt, Gulf etc.
Attractive Tariff Policy which may follow attractive investment.
Specific measures will be taken for expansion of domestic market.
Incremental investment of USD 35 to 40 billion to Automotive Industry
during the next 10 years.
National Road Safety Board to act as the coordinating body for promoting
safety
The Government of India has proposed setting up of NAB, which will act as a
Increase in Excise Duty on vehicles exceeding 1500cc and 4000mm with a ground clearance
above 170mm. These vehicles are mainly the Utility Vehicles barring a few exceptions in the sedan
segment. However, the Revenue Department has clarified that the sedans will be charged the
lower value of 27% as against the hiked duty of 30%.
High end imported luxury cars will be taxed more due to the increase in custom duty from 75% to
100%
Motorcycles with engine capacity >=800cc to attract custom duty of 75% as against the earlier
60%
The excise and custom benefits offered to the components of EV and hybrid vehicles have been
extended till March 2015 to promote Eco-friendly vehicles. Custom duty has been exempted on
import of lithium ion batteries
JNNURM Phase II has renewed hopes among the CV players facing huge turmoil in the domestic
market. The mission plans to allocate funds for purchase of 10000 buses.
The excise duty has been reduced on truck chassis from 15% to 13%
MAJOR PLAYERS
Hero Motocorp
Hero is the worlds largest manufacturer of two wheelers by sales. It holds the
leadership position in Indian two wheeler markets with 43% market share
The motorcycle segment accounts for approximately 95% of the companys two
wheeler sales volumes. Within the motorcycle segment, nearly 80% of the volumes
are contributed by the executive segment.
PRODUCT PORTFOLIO
Financial Data
ECONOMY
MODELS
EXECUTIVE
MODELS
PREMIUM
MODELS
SCOOTER
SEGMENT
CD DAWN, CD DELUXE
SPLENDOR, PASSION
KARIZMA R, ZMR, HUNK,
CBZ XTREME, IMPULSE
PLEASURE, MAESTRO
2010-
2011-
2012-
11
Net Revenues (Rs 19397.9
12
23579.0
13
23768.1
Cr)
3
Cost of production 15446
3
19522.4
1
19710
(Rs Cr)
EBITDA (Rs Cr)
PAT (Rs Cr)
EPS (Rs Cr)
Gross Block (Rs Cr)
9
3983.35
2378.13
111.79
6308.26
3682.86
2118.16
95.87
6685.07
2822.31
1927.9
79.51
5538.46
MAJOR PLAYERS
Bajaj Auto Ltd
PRODUCT PORTFOLIO
ECONOMY MODELS
EXECTUVIE MODELS
PLATINA, BOXER
PULSAR
135cc,
DISCOVER 125cc
PREMIUM MODELS
PULSAR 150, 180, 220
and 200NS, KTM DUKE,
NINJA, AVENGER
THREE
WHEELERS- RE 4S, GC MAX, RE 600,
GOOODS
AND MEGA MAX
PASSENGER CARRIER
Financial Data
2010-
11
12
13
16398.2 19528.9 19997.2
Cost
of
2011-
2012-
3
8
5
production 12757.5 15212.9 15573.0
(Rs Cr)
EBITDA (Rs Cr)
PAT (Rs Cr)
EPS (Rs Cr)
Gross Block (Rs Cr)
5
4472.28
3339.73
108.92
3395.16
2
4194.03
3004.05
96.51
3396.06
4
4430.74
3043.57
97.53
3828.85
MAJOR PLAYERS
Mahindra and Mahindra
Mahindra & Mahindra Ltd. is the flagship company of the Mahindra Group,
based in Mumbai
It is the only company in the industry having its presence in all the five subsegments i.e. Two Wheelers, Three Wheelers, PVs, CVs and Tractors
It is the market leader in Utility vehicles with a market share of 47.7% and
tractors with a share of 40.2%.
SEGMENT
PRODUCT
Passenger
vehicles
Key
Financials 2010-11
2011-
201213
9374
(Rs Cr)
Gross Block
5849
12
8063
Net Revenues
23477
31835
40441
EBITDA
3441
3769
4709
PAT
2662
2878
3353
EPS (Rs)
45.33
48.88
56.8
MAJOR PLAYERS
Tata Motors
Tata Motors is India's largest automobile company, a subsidiary of the Tata Group,
based in Mumbai.
It is the leader in nearly all commercial vehicle segments with a market
share of around 58%.
It is also fifth-largest truck manufacturer, fourth-largest bus manufacturer
by volume and fourth-largest passenger vehicle manufacturer
In its last fiscal year, which ended in March, Jaguar Land Rover posted a
18.3% jump in retail sales and became the primary driver of profit for Tata
Motors.
SEGMENT
Passenger vehicles
PRODUCT
Nano,
Indica,
Indigo,Vista,Manza,
Sumo,Safari
Medium
&Heavy Prima,, Construck, Starbus,
Commercial
Divo, City ride
Intermediate
Winger, Winger Platinum
Commercial
Small Commercial
Key
Financials 2010-
2011-
2012-13
(Rs Cr)
Gross Block
11
21883
12
27111
30312
Net Revenues
47957
54217
44766
EBITDA
4705
4177
1718
PAT
1811
1242
302
EPS (Rs)
28.55
3.91
0.95
MAJOR PLAYERS
Maruti Suzuki India Ltd
MSIL is Indias largest passenger vehicle manufacturer with a market share of around
45.5% at present
Suzuki Motor Corporation (Suzuki) of Japan holds 54.2% stake in the companyMaruti
Suzuki reported a sales of 87323 units in August, 2013 against a sales of 54154 units
in August, 2012. The sales in 2012 were down due to unrest in Manesar plant.
Maruti Suzuki had planned to set up a plant in Gujarat at an investment of Rs 4000
crore. This plant was to be commissioned by 2015-16. However, due to the economic
slump, the company has delayed the construction of the new plant. The plant is not
expected to be commissioned even till FY16
SEGMENT
PRODUCT
2012-
A1 segment
Maruti 800
Cr)
Gross Block
11737
12
14734
13
19801
Net Revenues
36561
35558
43589
EBITDA
3473
3019
4230
PAT
2288
1635
2392
EPS (Rs)
79.21
56.6
79.19
A2 segment
A3 segment
A4 segment
Kizashi
Sector Overview
Revenue Contribution from
different segments
16%
5% 2%
16%
OEM
54%
Replacement
68%
Passenger Vehicles
22%
17%
Exports
Commercial Vehicles
Two-Wheelers
Tractors
Three Wheelers
200000
182100
150000
100000
220800
Turnover Auto
Ancillary
Industry
135700
105700
50000
0
2008-09
Source: ACMA
2009-10
2010-11
2011-12
2012-13
21
USA
56
5
7
6
Turkey
Thailand
UK
South Korea
20
31
China
16
12
Japan
Germany
14
Thailand
Germany
60000
56600
51441
50000
40000
30000
20000
38760
31280
33485
30680
34500
Imports
Exports
23712
18400
16048
10000
0
2008-09
Source: ACMA
2009-10
2010-11
2011-12
2012-13
Industry Division
Industry Breakup
19%
31%
9%
10%
12%
19%
Engine Parts
Drive, Transmission & Steering
Parts
Suspension and braking parts
Equipment
Electrical parts
Others
Source: ACMA
Major Players
Engine Parts
Electrical Parts
Drive
Transmission &
Steering Parts
Suspension &
Braking Parts
Equipment
Tyres
Value Chain
ACMA
The major tariff rates of different segments of the component market remained the
same in this years budget
Allowance of 15% on investments of Rs 1.0 billion and above in plant and
machinery during the period 2013-15 provided to manufacturing entities
Non-tax benefits enjoyed by Micro, Small & Medium Enterprises (MSMEs) allowed
for a period of upto three years even after growing out of the MSME status
Refinancing capability of SIDBI for lending to MSMEs enhanced from Rs. 50 billion to
Rs. 100 billion
An amount of Rs. 22 billion allocated for setting-up 15 additional tool room and
technology development centres
An amount of Rs. 10 billion earmarked for skill development schemes for youth
Growth Drivers:
Replacement Demand
Exports healthy growth of 15-20% - Rupee depreciation
Rising share of revenues from non-automotive segment
Onset of festive season
Factors of Concern:
Auto Demand
Labour Issues at Auto manufacturing plants as also Auto
Components plants
Medium & Heavy Commercial vehicles segment growth concerns
Slower-than-expected recovery in Europe and US auto demand
would delay the growth trajectory for export-oriented companies.
Increasing raw materials cost
Revenue by Segment
10%
12%
India
23%
65%
OEM
Europe
South Africa
24%
66%
Replacement
Export
MRF; 27%
Birla; 11%
Ceat; 12%
JK tyres; 16%
Demand Breakup
Exports; 16%
OEM; 23%
Revenue Breakup
98%
Passenger vehicles
Growth Drivers:
Factors of Concern:
Volatile other raw material prices - Nylon Tyre Cord Fabric, carbon
black and synthetic rubber (PBR+SBR)
Dependency on Medium & Heavy Commercial Vehicles Account
for around 65%
Dependency of MHCV segment
Growth Drivers:
Robust solar equipments and mobile batteries demand
Demand for Tubular batteries five year warranty
Government initiatives 10% of power used by telecom towers
through renewable sources
Electric vehicle sales
Expansion of railways
Factors of Concern:
Low sales growth of automobiles
High and volatile input costs - Lead (80% of the cost)
Large unorganized market
Key Learnings
Automobile and Auto Ancillaries sector
Overview
Revenue, Costs Breakup, Imports, Exports
Industry Cluster, Value Chain
Sub Segments
Overview
Market Share
Growth Drivers
Factors of Concern
Outlook
Industry Bodies SIAM, ACMA, Government Rules and Regulations
Impact of Budget
Latest Trends and Happenings
Key Players
Tyre Industry
Battery Industry
Thank You!