Summary
Owning a car is aspired by every Indian household and with low penetration, increasing income levels and resumption of buoyancy in the economy, the opportunity in the passenger vehicle market is humungous.
At present, around 30 out of every 1,000 households in India own a car. Even if the households that can afford owning a car are considered, the penetration is as low as 45 per cent. Having said this, of the households affording a car, around 70 per cent fall at the bottom of the income distribution pyramid and can afford owning a small car only. Furthermore, the excise duty on small car is lower at 8 per cent as against 20 per cent on big cars. This would translate into strong growth in the small car segment. The factors like households affording big cars but opting for small cars on account of their
easier maneuverability given the traffic chaos and parking constraints in metros and poor infrastructure and congested agglomerations in smaller towns would help pushing the small car sales growth. Furthermore, rich households opting for small cars as their additional cars either for female or young members in the family or for smaller trips would also push small car sales.
Nano is foreseen to give a supply-side push to the small car sales, as its first year cost of ownership, which typically determines the threshold income levels for buying the vehicle, is around 25 per cent lower than Maruti¡¯s 800, the next cheapest available car. This has added 1 million households that
can afford buying a car by 2013-14.
The Original Equipment Manufacturers (OEMs) have taken into cognizance the humungous opportunity in small car sub-segment. Four out of the six launches till date in calendar 2009 fall in small car sub-segment, which includes Tata Nano, Maruti Ritz, Fiat Punto and Honda Jazz. Only Tata
Manza and Chevrolet Cruze (General Motors) fall in mid-size sub-segment. Eight more launches are expected in the small car sub-segment in the next 15-18 months.
We have developed a detailed statistical model that attempts to forecast the domestic passenger vehicle sales. The sales are segregated between personal use and commercial use on the basis of interaction with the industry and analytical acumen. Vehicle sales for commercial sales are forecasted on the basis of service sector GDP growth, while the vehicle sales for personal use are forecasted on the basis of ownership cost and the target household that can afford to own a car.
Other qualitative factors like macro-economic outlook, consumer confidence, willingness of vehicle financers to finance purchases, actions of OEMs like launches, aggressiveness, sales push techniques, delaer network etc have also been quantitatively built in the demand forecasting model.
We foresee healthy growth of passenger vehicles in the next 4-5 years, with small car sales growth outpacing the growth in sales of big cars or sedans, as around 70 per cent of the households affording a car can buy a small car only.
Abundant and low-cost labour coupled with local availability of raw materials like steel, aluminium and natural rubber, coupled with healthy demand outlook and 100 per cent FDI has made India an attractive destination for foreign players that are eyeing our country as the hub for small car
production.
Table of Contents
EXECUTIVE SUMMARY
I. OUTLOOK SECTION
Outlook on Domestic Market
Outlook on Exports
Demand Forecasting Model
Outlook on Profitability
II. INDUSTRY SECTION
1. INTRODUCTION
Classification of automobile industry
Classification of passenger vehicle industry
Evolution of the industry
Herfindal-Hirschman Index
Major Clusters
Government Policies-Customs Duty, Excise Duty
VAT / Sales Tax, FDI, Research & Development
Porter's seven force analysis
2. DOMESTIC MARKET
Size
Trend in Passenger Car Sales
Trend in Utility Vehicle Sales
Trend in Multi-purpose Van Sales
Player-wise performance-
3. PRE-OWNED CAR MARKET
Introduction
Size
Structure
Financing Scenario
Buyer Profile
Competition with new cars
Growth drivers
Challenges faced
4. IMPORTS
Size
Segments
Key origin countries
5. EXPORTS
Size
Key Markets
Trend in exports of Passenger Cars
Trend in exports of Utility Vehicles
Trend in exports of Multi-purpose Vans
Player-wise performance
6. COST STRUCTURE
Raw materials costs-Steel, Plastic, Rubber
Royalty and Technical know how costs
Research and Development costs
Selling and Marketing costs
Employee costs
Depreciation costs
7. PROFITABILITY AND CREDIT PROFILE
8. GLOBAL SCENARIO
Introduction
Operating margins
Net profit margins
Return on Capital Employed (RoCE)
Debt equity
Interest Coverage
Asset Turnover
Major Regions
United States (US)
European Union
Asia Pacific
Global Trade
Key Players
III COMPANY SECTION
Maruti Suzuki
Hyundai Motors
Tata Motors
Mahindra and Mahindra
Honda Siel
IV ANNEXURES
Technical Aspects of the industry
Sales Volumes by segment and sub-segments for last five years: Domestic and Exports
Player-wise Domestic Sales Volumes by segment and sub-segments for last five years
Player-wise Export Volumes by segment and sub-segments for last five years
Player-wise Total Sales Volumes by segment and sub-segments for last five years
Global Manufacturer-
LIST OF PICTURES AND GRAPHS
EXECUTIVE SUMMARY
Snapshot of projected PV sales in domestic market
OUTLOOK ON DOMESTIC MARKET
Snapshot of projected PV sales in domestic market
Lower excise duty on small cars benefiting the segment
Large portion of addressable households at the bottom of income pyramid
INTRODUCTION
Classification of the automobile industry
Classification of the PV industry
Passenger Vehicles Industry-Segmental break-up (Volumes)
Domestic Passenger Vehicles Industry-Market share trend (Volumes)
Major Clusters
Porter's seven force analysis
DOMESTIC MARKET
Trend in India's domestic sales-PV, PC, UV, MPV
Domestic sales volumes as share of total sales-Maruti Suzuki, Hyundai, Tata Motors, Mahindra and Mahindra.
PRE-OWNED CAR MARKET
10 year trend in India's pre-owned car market size
IMPORTS
PV Imports Trend (PC and UV)
Passenger Vehicle Imports-Country of origin (by value): 2008-09 and 2003-04
EXPORTS
Key destinations for PV exports from India (FY 2009)
Trend in India's exports-PV, PC, UV, MPV
Export volumes as share of total sales-Maruti Suzuki, Hyundai, Tata Motors, Mahindra and Mahindra
COST STRUCTURE
Domestic Steel Prices
Steel Prices in China
Natural Rubber Price Trend
GLOBAL SCENARIO
Major Producers, exporters and importers
Regional production mix of the top passenger vehicle manufacturers (2008)
PLAYER PROFILES
Maruti Suzuki-Domestic Sales Segmental Breakup (2009)
Hyundai Motors-Domestic Sales Segmental Breakup (2009)
Tata Motors-Domestic Sales Segmental Breakup (2009)
Mahindra and Mahindra-Domestic Sales Segmental Breakup (2009)
Honda Siel-Domestic Sales Segmental Breakup (2009)
LIST OF TABLES
EXECUTIVE SUMMARY
Small cars to drive domestic PC sales growth
Expected launches by various OEM in next few months
Upcoming capacities in next 2-3 years in the PC industry
Small cars to drive PC exports growth
Outlook on Margins
OUTLOOK ON DOMESTIC MARKET
Domestic PV sales forecasts
Small cars to drive domestic PC sales growth
Nano scores favourable both on first year as well as recurring annual costs
Owning a new Nano is comparable to owning a pre-owned 800
Recurring costs would lead to households refraining from replacing two-wheelers with Nano
Expected launches by various OEM in next few months
Upcoming capacities in next 2-3 years in the PC industry
Player-wise sales and market share in costlier car sub-segments
...
LIST OF BOXES
INTRODUCTION
Evolution of the industry
