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SURVEY FY2017
A MIXED BAG OF OPTIMISM
AND CAUTION
BUSINESS
SENTIMENT
SURVEY FY2017
Editors Note
Nabeel A Khan
Editor, ETAuto
nabeel.khan@timesinternet.in
CONTENT
1. Introduction
6. Expected Investments
13
2. Methodology
3. Respondents
7. Employment
7.1 Hiring
7.2 Firing
16
16
17
8. Capacity Utilisation
18
9. Exports Growth
20
21
22
10
10
11
11
12
IN
INTTRO
RODDUC
UCTTIO
IONN
inancial Year 2016 has ended and new targets and plans have been set
for FY 2017. At this time, ETAuto Business Sentiment Survey FY2017, has
attempted at gauging how the automotive industry stakeholders see the
sector progressing in this fiscal year.
The survey takes into account all aspects that have a telling impact on how the
industry will pan out in the next 10 months, like the capital investment, expected
hiring in industry as well as by individual companies, overall growth in different
automotive segments and also how the recent policy upheavals will impact the
industry going forward.
>>>
>>>>>>>
METHODOLOGY
W
>>>
automotive industry.
The respondents also gave their opinions and suggestions through
the remarks section which have proved valuable to us in gauging the
mood prevailing in the industry at present and also where the industry
stakeholders, you, see the industry heading to.
From May 13, our team started collecting and analysing the responses
and data collected from the survey. Then responses were collated and
analysed and is being produced here as ETAuto Business Sentiment
Survey FY 2017.
RESPONDENTS
Which part of auto Industry
do you belong to?
Respondents
profile
OEM
Other
Others
Mid Level
16.8%
25%
28.8%
30%
21.9%
ET
Top
Management
Managers
>>>
Dealership
37%
8%
>>>>>>>
>>>
9
10
9
>>>
>>>>>>>
AUTOMOTIVE
INDUSTRY OUTLOOK
The lean period for most segments that started post 2012,
seems to have come to end. In FY 2016, no segment reported a
de-growth over previous fiscal year. In fact, what is interesting
to note is that the segment which registered a negative sales in
FY 2015, commercial vehicles (CV), saw the highest growth in
sales in FY 2016. CV segment de-grew by 2.8 percent in FY 15
but grew by 11.5 percent in the recently concluded fiscal.
34.7
22.5
The fact that over 33 percent feel that growth in PV segment will be less than
5 percent, with a negligible (5.5% of the respondent) even forecasting a negative
growth, it is clear that the segment is still not completely out of the woods yet.
FY2016 saw some of the biggest launches in PV space. Many experts believe,
was the reason for the growth for the segment through the last fiscal year.
18.9
9.3
PASSENGER VEHICLE
(Cars & SUVs)
8.7
5.5
Figures in percentage
Negative
>>>
10
0-2%
2-5%
5-8%
8-10%
10-15%
For the growth to sustain, this year to will have to have equal number of
important launches. Some of the players who have lined up product for launch
this year include Tata Motors, Honda Cars, Volkswagen.
One of the respondents in the remarked that With enthusiasm in the market
observed in April sales and good monsoon predictions, expect close to double
digit growth in the Sector.
TRACTORS
Figures in percentage
27.3
24.5
24.8
23
16.7
15.8
19.9
16.4
7.6
COMMERCIAL VEHICLE
(MHCV & LCV)
7.8
10.1
Figures in percentage
5.4
Negative
Negative
0-2%
2-5%
5-8%
8-10%
10-15%
0-2%
2-5%
5-8%
8-10%
10-15%
TRACTORS
But the forecast for good monsoon has pushed up the hopes of a few
stakeholders in the industry. 24 percent of the respondents felt the sales
volume would be significantly higher, between above 8 percent, than what
has been seen in the last year.
COMMERCIAL VEHICLE
11
>>>
One of the worst performing segments in automotive industry for the last
two years has been the tractor which has been left crippled by belownormal monsoon for three consecutive years. However, it is predicted to
get better as this year the monsoon has been forecast to be better than
normal. Over 27 percent of the people who gave their inputs for the tractor
segment, said that they expect a growth of 5-8 percent in the tractor
segment.
>>>>>>>
TWO WHEELER
(Motorcycle & Scooter)
MOTORCYCLE
SCOOTER
29.4
26.5
24.5 25.2
24.7
21.8
21.6
18.5
23.7
17.4
15.4
11
9.4
7.6
3.3
2.2
Negative
TWO-WHEELER
The responses for two-wheeler segment,
especially the scooter segment, mirrored what
has been happening for the last couple of years.
Scooters are again expected to outperform
the motorcycle segment as 50.6 percent of the
respondents feel the scooter segment will grow
by over 8 percent as against 39.4 percent of the
respondents for motorcycles to grow by over 8
percent. While about a quarter of the respondents
felt that motorcycle sales in India grow above 5
>>>
12
0-2%
2.7
2-5%
5-8%
8-10%
Figures in percentage
14.1
10-15%
EXPECTED
INVESTMENT
n R&D/Design, nearly 27
percent people said that their
investments will be between
Rs 2-5 crore. The second
highest number of people, over
21 percent said that investment
would range between Rs 5-20
crore in R&D. However, what
was interesting that nearly 16
percent people said that the
investments in R&D will be above
Rs 200 crore. This percentage
(of people investing more than
Rs 200 crore) is highest among
all other parameters including
capacity expansion, Automation
and Merger & Acquisition (M&A).
>>>
13
>>>>>>>
18.9 19.1
15.8
15
12.2
13
9.4
11.1
8.6
27.1
27.1
CAPACITY EXPANSION
21.1
2-5cr
15.9
13.7
10.4
>>>
5-20cr
20-50cr
50-100cr
100-200cr
>200cr
18.4
16
13.5
11.4
R&D/DESIGN
14
AUTOMATION
M&A
12.9
11.7
4.1%
0-5%
29.4%
5-10%
44.7%
10-20%
4.3%
1.1%
20-30%
>30%
15
>>>
17.4%
Negative
>>>>>>>
HIRING
AND FIRING
As far as employment generation goes, let us give the news that will
settle the nerves first. Not many people need to worry as very few job
cuts are expected this year. Automobile industry employs nearly 32
million people directly and indirectly and any amount of change will
have a major impact on the overall employment scenario of the country.
R&D
0-5%
5-10%
10-15%
5.1
12.8
Figures in percentage
31.1
Mid Level
10.1
11.6
8.2
4.7
11.2
19.7
31.7
32.1
32
44
Shopfloor
13.6
4.6
12.7
29.5
28.8
40.8
42.5
11.2
47.8
Top Management
>15%
HIRING
industry, 29 percent feel that hiring would hover between 5-10 percent.
Hiring for FY 2017, on the other hand, is expected to stay in low single
digits of 0-5 percent. Maximum respondents said that across all areas
like shopfloor, R&D, sales & marketing and levels like mid-level and top
management, hiring will be between 0-5 percent.
At top management level, nearly half the respondents said that the hiring
will be between 0-5 percent. The second-highest number of respondents,
31 percent said that there will be no hiring at the top management level.
>>>
16
Shopfloor
R&D
0-5%
5-10%
10-15%
Figures in percentage
0.8
5.1
6.6
32
Mid Level
0.8
2.8
11
55.2
33.4
1.5
7.4
28.5
51.8
59.4
0
1.8
23.3
1.2
2.1
8.6
32.5
55.3
67.8
Top Management
>15%
FIRING
Majority of the respondents said that job cuts at their organisation will
be 0%. It was in R&D that highest number of people, over 67% said that
there will no job cuts at all. This gives a clear indication of the increasing
emphasis of auto industry player on research and development in India.
This further complements the earlier finding that a good number of
people will invest more than Rs 200 crore in their R&D setup.
>>>
17
>>>>>>>
CAPACITY UTILISATION
According to the responses received on ETAuto Business Sentiment Survey FY 2017, the capacity utilisation has been below average.
>>>
18
Figures in percentage
2W/Component
PV/Component
45-55%
55-70%
70-85%
CV/Component
85-100%
2W/Component
PV/Component
Negative
0-5%
5-10%
10-20%
CV/Component
>20%
19
>>>
>>>>>>>
EXPORTS GROWTH
Exports have been one of the main stay for automobile industry in times of
falling domestic demands and maximum respondents feel, it will continue to
be so. Over 40 percent people who gave their inputs for the question said that
the exports will continue to grow between 0-5 percent in FY 2017.
Negative
8.5 %
0-5 %
40.1 %
5-10 %
34.5 %
10-15 %
17.7 %
>>>
20
With the Make in India initiative being in the spotlight, exports in the
industry is expected to show a growth in FY 2017.
IMPACT OF
POLICY CHANGES
Yes
62.4%
26%
Minor
Impact
21
>>>
No
Figures in percentage
11.6%
>>>>>>>
ELECTRIC
VEHICLES
Electric vehicles have been the buzzword in the industry around the world
and slowly they are taking roots here in India as well. Last year, Government
introduced a subsidy scheme called FAME Scheme (Faster Adoption and
Manufacturing of Hybrid & Electric Vehicles) under which it earmarked
Rs 795 crore for two years. The scheme,it seems, did have an impact as the
sales grew by 37.5 percent in FY 16 to 22,000 unit.
Figures in percentage
19.1 %
4.7%
60.7%
15.5%
No Growth Minimal(20%)
Good(35%) Rapid (50%)
>>>
22
owever,
not
many
believe that this growth
can be sustained in
FY 2017 as almost 60
percent respondents think that
the growth will be minimal around
20 percent as compared to sales
in FY 2016. Only 20 percent of
the participants think that the
growth will be either good (35
percent) or Rapid (50 percent).
Rest 19 percent are of the
view that status-quo in electric
vehicle sales will be maintained
in FY 2017.
CONCLUSION
23
>>>
>>>>>>>
e
v
i
F
Top
s
k
r
a
Rem
1. In auto component space - continuous expansion in product portfolio
to deepen our stakes with OEM will be key to success But even though,
the predictions may vary depends on monsoon, govt policies and
even political changes will massively affect the industry.
2. Automobile companies should hire from the technical institute for auto
engineering for industry development-as a csr activity.
3. Diesel ban should be avoided. Focus on skill development and taxes
(manufacturer, road and levies) on electric vehicles should be removed.
4. Both industry & Government need to have concrete year wise targets
for Make in India.
5. Over all there will be growth in the automobile industry as a lot of
new launches are happening this in the passenger vehicle segment,
especially petrol vehicles.
SURVEY QUESTIONS
Q1. Which part of auto industry do you belong to?
Q2. What kind of growth do you expect in sales in FY 2017?
Q3. How much do you expect to invest in FY 2017? (in Rs)
Q4. How do you look at the overall investment growth by automotive industry in FY 2017 over the previous year?
Q5. How do you look at your hiring in FY 2017 compared to previous year?
Q6. Do you expect job cuts in the FY 2017?
Q7. What was your average capacity utilisation in FY 2016?
Q8. The average capacity utilisation is expected to increase by how much in FY 2017?
Q9. By how much do you see your exports growing this year compared to last year
Q10. Will the policy changes, like additional infra & luxury cess, impact vehicle sales
Q11. How do you see growth of electric vehicles in India
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