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Indian Automobile Industry: Brief Introduction (and downloadable Report)
India is the world's second fastest growing auto market and boasts of the sixth largest automobile industry after China, the US, Germany, Japan and Brazil. According to Vikas Sehgal, Global Head of automotive industry, Rothschild, the Indian automobile market, which includes cars, trucks and auto parts, is pegged at 3.5 million units by the end of 2011-12. Rothschild is a UK-based global financial advisory firm.
India's car market is evolving at a great pace. A car is not only a utility, but also represents aspirations and image of its owner. Hence, auto giants across the globe are leaving no stone unturned to attract Indian consumers by offering luxury, value, utility and convenience in their products.
Key developments, initiatives, investments et al pertaining to the sector are discussed below.
Market Dynamics
Indian domestic passenger vehicle market is increasingly getting dominated by smaller cars. For the quarter ended December 2011, Maruti Suzuki India Ltd held a share of 34.3 per cent in domestic passenger vehicle pie while Hyundai India enjoyed 15.8 per cent of it. Tata Motors (standalone operations) and Mahindra & Mahindra (M&M) had a market share of 14.6 per cent and 12 per cent respectively during the reported period.
Key Statistics
- The Society of Indian Automobile Manufacturers (SIAM) anticipates 11-13 per cent growth in car sales during 2012-13
- The overall Indian automobile sector recorded a growth of 14.25 per cent (16.9 million units from 14.8 million units in 2010) in 2011. Passenger car sales increased by 4.24 per cent to 1.946 million units (from 1.867 million units in 2010), two-wheeler sales by 16.22 per cent to 13 million units and three-wheeler sales by 4.74 per cent to 525,000 units
- For 2011-12, passenger cars sales are expected to grow at 0-2 per cent, two-wheelers at 13-15 per cent and commercial vehicles at 18-20 per cent
- The cumulative production for April-December 2011 registered a growth of 14.94 per cent over same period in 2010. Production in December 2011 increased by 10.91 per cent year-on-year (Y-o-Y)
- Overall automobile exports registered a growth rate of 28.97 per cent during April-December 2011.
- Passenger Vehicles registered grew 18.14 per cent in this period while two-wheelers, commercial vehicles and three wheelers segments recorded growth of 29.75 per cent, 24.66 per cent and 42.63 per cent respectively
Indian Automobile Industry: Major Developments & Investments
Ford Motor Co's Indian subsidiary has placed an order with its Indian counterpart - major constructor Kajima Corp's subsidiary – to develop an auto factory in the city of Sanand in Gujarat. With an estimated outlay of 77 billion yen (US$ 1 billion), the facility is expected to get completed by 2014 with an initial annual capacity of 240, 000 units.
Bajaj Auto – India's second largest automaker – has made a debut in four-wheeler segment by launching a low-cost, eco-friendly automobile - RE60. The four wheeler vehicle has three-wheeler customers as its target market and is available in three fuel variants (petrol, CNG and LNG). The company sees Sri Lanka and Africa as potential export markets for RE60.
Indian auto major M&M is looking to develop enough infrastructure to run electric cars in India. The first company to commission solar power projects under the Jawaharlal Nehru National Solar Mission (JNNSM), M&M is on a look-out for solar powered charging stations to fuel electric cars. The company offers electric cars under the Mahindra-Reva brand.
Luxury car maker Mercedes Benz AG's Indian subsidiary Mercedes Benz India Ltd (MBIL) has set itself an ambitious target to sell over 70,000 cars in the Indian market by 2020; aiming for 1000 per cent growth in the next 9-10 years and hence leading the luxury car segment. The company will launch its A Class concept in India in 2013 and has already invested Rs 700 crore (US$ 135.85 million) in a new assembly plant in India.
With an intention to take on Maruti Suzuki India Ltd's largest-selling Alto hatchback, Nissan Motor Pvt Ltd is planning for a small car for Indian markets. The company is studying the market currently and would come up with a crisp plan in 2-3 years.
Auto Expo: A Grand Success
India's 11th Auto Expo jointly hosted by SIAM, Confederation of Indian Industry (CII) and Automotive Component Manufacturers Association (ACMA) took place at Delhi's Pragati Maidan during January 5-11, 2011. A grand success in terms of footfall, the exhibition embraced 1,500 participants from 24 countries and witnessed launch of over 50 new products.
Indian automaker Maruti Suzuki unveiled its XA Alpha concept sports utility vehicle (SUV) while Hyundai showcased its new Sonata and its concept multi-purpose vehicle Hexa Space. German automobile major Volkswagen launched new versions of its SUV Touareg and its small car Beetle along with its concept hybrid car XL 1. Japanese auto giant Nissan Motor Company showcased its seven-seater car, the Evalia along with its zero-emission electric car Leaf, the Nissan GTR and the Compact Sports Concept.
Similarly, other auto makers like Mercedes-Benz, M&M, BMW and Ford unveiled their new products. In the two-wheeler space, Suzuki Motorcycles, Yamaha India unveiled their offerings while Royal Enfield and Harley Davidson made their bike launches.
Thus, it can be reasonably stated that major auto makers - Indian as well as foreign – are making all the efforts to please Indian auto enthusiasts and Auto Expo is a perfect platform for them where they can reach out to masses in the most effective way.
Government Initiatives
The Government of India is in the process of forming a National Automotive Board (NAB) which would become a formal set-up to look into the issue of recall of vehicles and hence improve manufacturing standards. The prospective body, to oversee technical and safety aspects of vehicles, will have representatives from all the nodal ministries and automotive bodies such as the Automotive Research Association of India (ARAI).
The Government of Gujarat has always been on a high to promote its industrial space especially its the automobile sector. In order to boost the State Government's efforts in this regard, Gujarat Government's Industrial Extension Bureau, along with Automotive Components Manufacturers Association, French Vehicles Equipment Industries (FIEV) and French auto-major Peugeot, organised a seminar and business meeting on January 9, 2011 wherein 60 French automobile component makers were briefed on opportunities to set up vendor park near Sanand (Gujarat's auto hub) in Ahmedabad district.
Similarly, the Government of Gujarat has announced its plan to disburse 240 acres of land at Sanand to the All India Plastic Manufacturers Association (AIPMA) to set up a plastic park that could attract an investment of about Rs 5000 crore (US$ 970.33 million). The Government's move marks its eye for detail as the measure has come in the light of the fact that a finished car would require about 150 kgs of plastic.
Road Ahead
According to a study by Rothschild, India would become the third largest auto industry by volumes after China and the US by 2015. Three- fold increase in investments by auto makers would boost car production capacity from 4.8 million units in 2010 to 12 million in 2018. The firm anticipates that the forecast would come to reality through 30 new factories that are estimated to come up in next eight years. The firm holds a bullish outlook on Indian auto industry and predicts a row of mergers and acquisitions in the coming years.
Exchange Rate Used: INR 1 = US$ 0.0194 as on January 14, 2012
JPY 1 = US$ 0.0129 as on January 14, 2012
To download 40-page report, please click here.
Source: IBEF - GAI
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