Annual Review of Indian Passenger Vehicles June 2012
Credit Analysis & Research Limited, June 2012
Indian Passenger Vehicle Industry: “CAUTION: SPEED BREAKER AHEAD”
The Indian Passenger Vehicle (PV) Industry has always been backbone for the economic growth of a nation. The growth levels remained subdued last fiscal mainly due to negative sentiments arising due to economic uncertainties, spiralling fuel prices and interest cost coupled with escalating inflation levels prompted many customers to defer their purchase decision. The rising gap between the petrol and diesel prices has led to the surge in diesel driven passenger vehicles. It is expected that the Indian PV market is likely to witness many new launches especially in the SUV segment.
CARE Research believes long-term macro factors like low penetration, rising disposable income and favourable demographics remains intact. At present, the penetration levels for passenger cars in India is significantly lower as compared to the emerging markets. The small car segment is likely to remain the main stay of the industry. However, large product offerings in diesel as well as emergence of super compact sub-segment within mid-size will drive growth for midsize cars. The competitive advantage arising out low-cost destination, proximity to Asian markets and lower shipment costs makes India a sourcing hub and a manufacturing base for major Original Equipment Manufacturers (OEM's).
CARE Research has developed a detailed statistical model that attempts to forecast the domestic passenger vehicle sales. The sales are segregated between personal use and commercial use based on the interaction with the industry and analytical acumen. Vehicle sales for commercial sales is forecasted based on the service sector GDP growth, while the vehicle sales for personal use are forecasted based on 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, dealer network etc have also been quantitatively built in the demand forecasting model.
The report elucidates facts on the Indian Passenger Vehicle (PV) industry, supplemented by the latest statistics. The report is divided into four sections. Section I mainly CARE Research's outlook on Indian PV industry over next 5 years. Section II covers overview of various segments of the industry, regulatory issues, trade scenario and overall performance of the domestic market. Section III gives details of the some key players in the industry. Section IV gives the annexure on the industry/ segment wise and detailed player wise numbers over the last five years. Following are few points which are emphasised to accomplish the report:
Section I
- CARE's outlook on Indian PV market for next five years
- CARE's outlook on the profitability of Indian PV manufacturers
- Break even analysis of various fuel options
- Diesel vehicles will surpass market share of petrol vehicles in the near term.
Section II
- Overall performance of domestic market for last 5 years
- Industry structure and competition along with market share
- Trade Scenario and various regulatory issues that govern the Indian PV industry
Section III
- Brief on key players in PV industry
Section IV
- Annexures
Executive Summary
SECTION- I CARE Research's OUTLOOK
Outlook on Indian PV industry
- Domestic market is expected to grow at a CAGR of 10-11 per cent by FY17
- Small car segment to grow at a CAGR of 6-7 per cent in next five years
- Mid size segment to record rise of 17-18 per cent by FY17
- A4-A6 to remain niche segment
- UV to grow at a CAGR of around 15-16 per cent during FY12-FY17 period
- Inadequate public transport infrastructure to fuel growth in MPV segment
- Rising young population coupled with rising income and low penetration levels will fuel growth
- Topline growth to remain healthy on back of high realization
- Growing demand for mid-size cars and rise preference for diesel variants to boost the realization in the medium term
- Retail price of diesel have remained more stable among all the fuels
- CNG still remains the cheapest option
- Diesel vehicles will surpass market share of petrol vehicles in the near term.
- Operating margins to improve in not before FY14
- Investments of around $3 billion expected in the next 3 years
- Asian markets to fuel the growth in short term as demand drops in the European markets.
SECTION- II INDUSTRY SECTION
Industry Segments & Competition
- PC dominates volumes however UV drives the growth
- Small Cars face competition from the mid-sized cars; however, the dominance of small cars to continue for now
- Preference is shifting towards mid-sized cars
- A4-A6 faces cannibalization from premium segment UVs
- UV improves presence in PV industry…
- MPV Segment continue to remain niche market
Regulations
- Motor Vehicle Act
- Emission Norms
- Fiscal Regulations
- Import duty
- Excise Duty
- VAT/Sales Tax
- Foreign Direct Investment
- Research and Development
Domestic Market
- PV industry witnesses one of the worst slowdown in the decade
- Voluminous passenger car segment witness a muted growth
- Small car segment witness marginal blip in demand
- Midsize segment outperforms in FY12
- A4-A6 segment post significant fall in FY12
- UV segment sales zoom on domestic demand
- Multipurpose vans observes healthy rise in FY12
- Demand Drivers
- Economic Factors
- Industry Factors
- Infrastructure
- Demographic
Trade Scenario
- PV exports bounce back in FY12
- Non European and Asian counterparts emerge as preferred export destination
- Hyundai & MSIL continue to remain the leading PV exporters
- PV Imports growth remains muted in FY11
- Germany continues to be a major exporter of PV's to India
Cost Analysis
- Raw Material Cost
- Steel
- Plastics
- Rubber
- Aluminum
- Employee Cost
- Royalty and R&D cost
- Selling and Distribution cost
Credit Profile
- Operating Margins
- Net Margins
- Return on Capital Employed
- Fixed Asset Turnover Ratio
- Debt-Equity
- Interest Coverage
- Working Capital Management
SECTION- III COMPANY SECTION
Maruti Suzuki India Limited
Hyundai Motor India Limited
Tata Motors Limited
Mahindra and Mahindra Limited
SECTION- IV ANNEXURE
Segment wise domestic sales and exports of the PV Industry
Segment wise player wise domestic sales in PC Industry
Segment wise player wise domestic sales in UV and MPV Industry
Segment wise player wise exports in PC Industry
Segment wise player wise exports in UV and MPV Industry
List of Graphs and Tables
SECTION- I CARE Research's OUTLOOK
Outlook on Indian Passenger Vehicle Industry
- Outlook on Indian PV industry
- PV: Outlook on segment wise sales
- Outlook on domestic UV industry
- Outlook on domestic MPV industry
- Age composition as a % of total population
- Trend in Per capita income
- Global PV penetration
- Domestic PV penetration
- Outlook on Sales, Volume and Realization
- Change in fuel prices since FY10
- Cost comparisons of various fuels
- Break even in number of years
- Diesel and petrol mix in PV industry
- Outlook on capacity and utilization levels
- Outlook on segment wise PV exports
SECTION- II INDUSTRY SECTION
Industry Segment and Competition
- Production Statistics for CY11
- Industry structure of PV industry
- Segment wise market share for PC industry
- Segment wise market share for UV and MPV industry
Regulations
- Regulatory Framework
- Change in technology for meeting various emission norms
- Import duty structure
- Excise duty structure
- Budgetary outlays for NATRIP
- Commissioning Schedule for NATRIP facilities
Domestic Market
- Trend in domestic PV industry
- Trend in domestic PC industry
- Price comparison across models in small and mid size segment in FY12
- Trend in domestic A4-A6 segment
- Segment wise domestic sales in PC market
- Trend in domestic UV industry
- Trend in domestic MPV industry
- Demand Drivers
- Trend in repo rate
- Key model launches over last 3 years
Trade Scenario
- Trend in PV exports
- Trend in breakup of PV exports
- Export share as on FY11
- Market share of key players as on FY12
- Trend in PV imports
- Imports share as on FY11
Cost Analysis
- Raw materials cost as a percentage to net sales (%)
- Annual and monthly trend in steel prices
- Annual and monthly trend in rubber prices
- Annual and monthly trend in aluminum prices
- Employee cost as a percentage to net sales (%)
- Royalty and R&D cost as a percentage to net sales (%)
- Selling and Distribution cost as a percentage to net sales (%)
Credit Profile
- Trend in operating margins (%)
- Trend in net margins (%)
- Trend in Return on Capital Employed (%)
- Trend in Fixed Asset turnover
- Trend in Debt-Equity
- Trend in Interest coverage ratio
- Trend in net working capital cycle (days)
- Maruti Suzuki India Limited
- Hyundai Motor India Limited
- Tata Motors Limited
- Mahindra and Mahindra Limited
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