Indian automotive sector

snapshot

18th November 2010

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 Private vehicles market potential

GDP (US$), India, 1990-2008 Vehicle ownership in India, 2010

Compiled from various sources
Source : United Nations
CAGR : No vehicle
12.1 % Car
1200
Motorbike
1000
Bicycle
800
600
400
Only 1 % of Indian
2000 2001 2002 2003 2004 2005 2006 2007 2008
households own a
private car,
10 % a motorbike
• 83000 millionaires (in USD) in India in 2009, up 20% from 2008
• India's growth expected to overtake China's before 2015
• Per capita income expected to overtake UK, US, by 2040

Household annual income,

Population in income bracket 2010, PPP

« Globals » : > € 80k

« Strivers » : € 40k - 80k

« Seekers » : € 15k - 40k

« Aspirers » : € 7k - 15k

« Deprived » : < € 7k

1985 1995 2005 2015 2025

Very low saturation, coupled with high disposable income growth and distribution, point to a large potential for private vehicles.

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 Trends, vehicle type distribution

Sales by vehicle type - India - FY 2009-2010

Passenger vehicles sales trends - India Source : SIAM, November 2010
Source : SIAM, November 2010
2 500 000 Passenger Vehicles
CAGR :
1 949 776
13.7%
2 000 000 Commercial Vehicles
531 195
1 500 000 Three Wheelers
440 368
1 000 000

500 000
Two Wheelers
0 9 371 231
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Total vehicles sales - India

Source : SIAM, November 2010 CAGR :
14 000 000 10.3%

12 000 000
10 000 000
The Indian automotive sector has witnessed
8 000 000
healthy growth for the past 7 years, and the
6 000 000 industry considers this to be sustainable for
another 10 years at least.
4 000 000
Car sales grow faster thant other categories,
2 000 000 but motorcycles still accounts for 75% of the
market today.
0
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

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 Market shares distribution (cars only)

Market shares distribution

Source : SIAM, 12/2009

Others Skoda Fiat

Ford
2% 1% 1% 2% Toyota
3%
Honda
3% The 4 largest players (Maruti, Hyundai,
GM Tata, Mahindra) hold 83% of market
4% shares.
Mahindra
8% The next 4 (GM, Honda, Toyota, Ford)
Maruti Suzuki hold 12%
45%
95% of the market is in the hands of 8
manufacturers (none of which are
European...)
Tata
14%

Hyundai
16%

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 European cars : manufacturing and marketing set-up

Some European manufacturers set-up

Dealerships Manufacturing

Mercedes 35 CKD / SKD (Pune)

Import duty on complete cars Except for luxury
(« CBU ») = 100% BMW 17 CKD / SKD (Chennai)
vehicles (low volumes,
less rivalry), the route to
the Indian market for Audi 14 CKD / SKD (Pune)
foreign manufacturers is
either the KD model or
Import duty on SKD and CKD complete localisation. Skoda 62 CKD / SKD (Pune)
parts = 10%

Volkswagen 38 CKD / SKD (Pune)

FIAT 110 CKD / SKD (Pune)

= European brands dealers = European brands dealers

= wealthiest areas = population density > 250

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 Main automotive industry clusters

NCR – Punjab – Rajasthan -

Madhya Pradesh

(non exhaustive)

Mumbai - Pune – Nasik –

Aurangabad - Gujarat
Chennai – Bangalore -
Hyderabad

(non exhaustive)

(non exhaustive)

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 Some decisions facing foreign Tier 1 and 2 entrants

Direct export ? Alone ?

+ -
● Total control ● Slower ramp-up

+ + ●

●
No revenue sharing

Gain precise
●HR and finance
hungry

market knowledge ● ….
Transaction =
sale of products ● ….

Local assembly ? With a local partner ?

+ -
● Faster ramp-up ●Could create a

+ +
competitor
● Lower investment
●Partner choice
●Access to partner's conditions success
network
Transaction = ● ….
sale of components ● ….

Local manufacturing ? Which location ?

Northern cluster ?
(Suzuki, Honda...)

+ + Western cluster ?
(EU manufacturers)

Southern cluster ?
Transaction = Sale / (Ford, Hyundai...)
licensing of know-how

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