adci report q4 2015

sewellsgroup.com

January 2016

sewellsgroup.comPage 1

About Sewells GroupAutomotive Dealer ConfidenceIndex

ADCI Survey Methodology Summary of Respondents

GAUTOMOTIVEDEALERCONFIDENCE

SEWELLS GROUP

INDEXGlobally, confidence indices are viewed as reliable precursors to business performance. Such indices aim to capture and quantify the sentiment of various industry stakeholders – be it CXOs, suppliers, vendors or distribution partners who usually are in the middle of the action. People within the industry, typically use these indices to get a sense of stakeholder sentiment and optimize their actions in line with the sentiment. Market analysts, on the other hand, interpret theses indices as ‘lead indicators’ of the performance of a particular industry or sector. An accurate, representative index co-relates highly with actual business performance.

The automotive industry in India contributes a significant share to country’s GDP. A healthy and growing domestic market, and an active and constructive involvement from the government, has made sure that this industry has come of age.

The important role played by auto dealers in this industry is well known. With their unique position in the market place, auto dealers are regularly in touch with ground realities. And therefore a dealer confidence indicator could be a useful signaling device for various stakeholders within the automotive industry eco-system.

Ssewellsgroup.comPage 2



Sewells Group Automotive Dealer Confidence Index (ADCI) is a measure of dealer sentiment about their business over the next six months from the time it is captured.

Within the automotive industry, dealers are in constant touch with prospects, customers, factory staff, financiers and other market intermediaries. Consequently, each dealer gets exposed to a plethora of information that in turn shapes his / her sentiment about the future of his business in short / medium term. The Sewells Group Automotive Dealer Confidence Index (ADCI) is an attempt to capture and quantify this sentiment from across the length and breadth of the country, representing multiple brands and product categories. The movement of this collective sentiment in the form of an index may be able to predict the direction of the wholesale and the retail sales within the industry.

We believe publication of such an index allows the industry stakeholders to have meaningful conversations well in time, which in turn helps them put together better strategies to perform at the market place.




TThe Sewells Group ADCI is designed as a quarterly index that is computed on the basis of responses received to a structured questionnaire from the automotive dealer fraternity in the Indian market. The questionnaire attempts to capture their sentiment about economy in general and their business in particular on a six month horizon.

Sewells Group tracks the trend of the index which offers an insight into the future direction of the market. We believe that it is the movement of the index that offers greater insights than the absolute value of the index in a particular quarter.

In this eighth edition of the ADCI, we have attempted to capture the sentiment of the dealer fraternity at the end of Oct-Dec quarter of 2015. The findings of this survey are compared with the findings of the previous seven editions to map the trend. We propose to repeat the survey at the end of each following quarter.

For this edition, a questionnaire was distributed electronically (by email) to the dealer fraternity in India. A total of 147 responses received, from dealers, representing 18 brands were used to compute the index. Every effort has been made to ensure that the index is meaningful and representative of the dealer sentiment. However, we advise reader discretion in using the results considering the low sample in some cases. At this stage, ADCI is designed only for “exploratory” and “indicative” purposes.

The overall ADCI at the end of Oct-Dec 2015 indicates that the dealers continue to maintain an optimistic view. The sentiment of the passenger car dealers continues show a steady rise. The two wheeler dealer sentiment though positive, has dampened a bit since the last quarter. The commercial vehicle dealers who continued to be pessimistic for last 7 quarters, have for the first time expressed some optimism at the end of Oct-Dec 2015 quarter.

A positive ADCI is an indicator of growth in the Indian auto industry. On account of the rural distress for the last two years, the two wheeler market definitely seems to be affected. However, an optimistic outlook of other segments demonstrates a healthy outlook of the dealer fraternity.



PASSENGER CARS TWO-WHEELERS COMMERCIAL VEHICLES

TOTAL NUMBER OF RESPONDENTS

9

75

EAST PASSENGER CARS TWO-WHEELERS COMMERCIAL VEHICLES

PASSENGER CARS TWO-WHEELERS COMMERCIAL VEHICLES OVERALL

78%

18%

BEFORE 1975

1975 - 1989

1990 - 2004

AFTER 2005

LOC

ATI

ON

OF

RES

PO

ND

ENTS

BR

AN

DS

REP

RES

ENTE

D

18 BRANDS

41%

24%

35%

55%

36%

70%

22%

6%

*Sub-sample size low. Reader discretion advised while considering the statistical significance.

3% 2%

9%

71%YE

AR

OF

INC

OR

POR

ATIO

N O

F D

EALE

RSH

IP

WEST NORTH SOUTH CENTRAL

1%

73%

20%

7%

147

11

29

107

7%

27%

34%

10%


91CITIES

22%


AUTOMOTIVEDEALERCONFIDENCE

END OF 15 QUARTERINDIA

OCT-DEC

INDEX

SEWELLS GROUP

The ADCI is designed to vary between -100 and +100, where an index score of -100 represents the most pessimistic outlook, and +100 indicates the most optimistic outlook. The index is based on how dealers see the overall market and their businesses performing in next six months

The high level findings of the survey at the end of Oct-Dec 2015 quarter are:

§ The overall ADCI stood at +14 indicating an optimistic sentiment amongst the dealers surveyed.

§ The passenger car ADCI stood at +17, representing a positive outlook amongst these dealers.

§ The two wheeler ADCI stood at +9, indicating a mildly optimistic sentiment of the two wheeler dealers.

§ The commercial vehicle AADCI stood at +2 indicating a mildly positive sentiment.


AUTOMOTIVEDEALERCONFIDENCE

END OF OCT-DEC 15 QUARTER INDIA

INDEX-TREND

SEWELLS GROUP

§ The index for passenger cars segmet stood at +17 during January 2016, as compared to +16 during Oct 2015, indicating strengthened optimism of the passenger car dealers.

§ A dip in sentiment was seen for the two-wheeler dealers, where the index was back to +9 from a high of +14 at the end of Jul-Sep 2015 quarter.

§ Commercial vehicle dealers’ sentiment had started showing signs of an upswing in the previous survey. The trend continued in this quarter as well. The index stood at +2 during January 2016 as compared to -4 during October 2015

§ As a result, the overall ADCI remains positive at +14 at the end of October-December 2015 quarter.

sewellsgroup.com

Future view of manpower strength of the business

Expected performance of the market as well as the

dealership over the next six months

Expected levels of sales, inventory and profits over the

next six months

View on the current situation of sales, inventory and profits vis-à-vis same period last year

Impact of the current economic scenario on the

market, as well as the dealership business

View on the current situation of sales, inventory and profits

vis-à-vis previous quarter

Page 7

ANALYSIS OF SURVEY FINDINGS

The ADCI survey delves into the following areas:

AUTOMOTIVEDEALERCONFIDENCEINDEX

SEWELLS GROUP

§ The following pages carry details of responses received during the eighth edition of the survey for questions covering the above areas.

§ To map the trend, the findings of this survey are compared with the findings of the previous three editions which captured the sentiments of the dealer fraternity in the last three quarters.

§ This section presents the distribution of responses across multiple questions and compared with the findings of the previous surveys.

020403

01Current Economic Environment in the Country

Impact of the Current Economic Scenario on the Market

Expected Economic Environment In The Country Over The Next Six Months

Impact of the Current Economic Scenario on the Dealership

page 8 page 9

page 10 page 11

060810

0709

05Dealership Performance Vis-A- Vis Same Period Previous Year

Expected Dealership Performance Over Next Six Months

Dealership Performance Vis-A-Vis Previous Quarter

Expected Manpower Strength Over Next Six Months

page 14 page 17

page 20 page 23

Expected Market Performance Over Next Six Months

Expected Dealership Performance Over Next Six Monthspage 12 page 13

1ECONOMIC

IN THE COUNTRY

CURRENT

ENVIRONMENT

§ Overall, 53% of the dealers feel that the current economic scenario in the country is positive.

§ A similar sentiment is expressed by passenger car dealers and two wheeler dealers.

§ However, a higher proportion of commercial vehicle dealers feel that the current economic scenario in the country is not too positive.

COMMERCIAL VEHICLES

EXCITING POSITIVE NOT SO POSITIVE WORRISOME


OVERALL

TWO WHEELERSPASSENGER CARS

*The responses for this question were captured only during the current edition

10%

43%35%

12%

55%41%

4%

45%

45%

10%

9%

38%46%

7%

% OF RESPONDENTS END OF Q4-2015

2EXPECTED

IN THE COUNTRY IN THE COUNTRY OVER THE NEXT SIX MONTHS

ECONOMIC ENVIRONMENT

COMMERCIAL VEHICLES




11%

62%

23%

4%14%

55%

17%

14%

64%

36%

*The responses for this question were captured only during the current edition

§ A high proportion of the dealers feel that the economic scenario in the country is going to improve in the next six months.

§ 73% of passenger car dealers, 69% of the two wheeler dealers and 64% of the commercial vehicle dealers feel that economic scenario will improve in the next six months.

6%

23%

61%

10%

OVERALL

% OF RESPONDENTS END OF Q4-2015

11%

§ At the end of Oct-Dec 2015 quarter, about 52% of the dealers felt that the current economic scenario is encouraging for the dealership business.

§ Opinion of the passenger car dealers has not changed much from the previous quarter.

§ Not a single two wheeler dealer felt that the impact of the current economic scenario on their market is exciting. This compare poorly with last quarter when 17% of the dealers expressed this sentiment.

§ Opinion of the commercial vehicle dealers has changed since the previous quarter. Whereas 21% of the dealers found the impact of the scenario worrisome in last quarter; not a single dealer felt the same this quarter.

sewellsgroup.com

TWO WHEELERS COMMERCIAL VEHICLES

3CURRENT ECONOMICSCENARIO

IMPACT OF THE

ON THE MARKET


0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

4%

40%

43%

13%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

2%

40%

42%

16%

PASSENGER CARS

35%

5%

46%

14%

END OF Q4-2015

37%

49%

3%

4%

48%36%

12%

55%31%

14%

45%55%

Page 10

4§ Overall, 51% of surveyed dealers indicated a pessimistic sentiment about the

effect of the current economic scenario on the dealership business.

§ Opinion of the passenger car dealers has not changed much since the previous quarter.

§ Two wheeler dealers' optimism has clearly come down from the previous quarter. Compared to 55% who saw a positive impact on dealership business, the proportion has reduced to 48%.

§ The proportion of commercial vehicle dealers who felt the impact on dealership business worrisome reduced from 43% in last quarter to just 9% this quarter.

COMMERCIAL VEHICLES



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

5%

43%

39%

13%

7%

36%

44%

13%


34%

7%

44%

15%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

END OF Q4-2015

39%

5%

44%

12%

CURRENT ECONOMICSCENARIOON THE DEALERSHIP

IMPACT OF THE

6%

45%39%

10% 7%

41%

35%

17%

36%

55%

9%

5MARKET OVER NEXT SIX MONTHS

EXPECTED

PERFORMANCE


COMMERCIAL VEHICLES


§ Overall, 78% of the surveyed dealers feel that the market performance is going to improve in the next six months.

§ There is a greater optimism among the surveyed passenger car dealers, where 83% of the dealers feel that the market performance in the next six months will be positive.

§ Both two wheeler dealers and passenger car dealers continue to remain optimistic about the expected market performance.

0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

6%

44%

42%

8%

27%

10%

61%

2%


22%

12%

62%

4%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

END OF Q4-2015

18%

10%

68%

4%

11%

72%

13%

4%10%

55%

28%

7%

64%

36%

17%

55%

17%

11%

6DEALERSHIP

OVER NEXT SIX MONTHS

EXPECTED

PERFORMANCE

§ Overall, the dealers continued to remain as optimistic as they were in the previous quarter.

§ Opinion of the passenger car dealers remains unchanged over the previous quarter.

§ Though positive, there is a slight decline in the optimism of the two wheeler dealers and the commercial vehicle dealers as compared to that in the previous quarter. 72% of two wheeler dealers and 64% of the commercial vehicle dealers feel positive about the dealership performance (down from 76% and 72% respectively at the end of Jul-Sep 2015 quarter).

COMMERCIAL VEHICLES



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

6%

50%

37%

7%

20%

11%

65%

4%


15%

19%

60%

6%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

END OF Q4-2015

14%

16%

63%

7%

16%

66%

11%7%

18%

46%

27%

9%

15%

47%

25%

13% 17%

24%

45%

14% 9%

36%46%

9%


7PERFORMANCE

YEAR

DEALERSHIP

VIS-À-VIS SAME PERIOD

PREVIOUSSALES INVENTORY PROFITS

§ 55% of the dealers in this quarter felt that their sales improved as compared to the previous year. 51% of the dealers in the previous survey (at the end of Jul-Sep 2015 quarter) had felt the same.

§ Opinion of the passenger car dealers about sales as compared to the previous year is felt better vis-à-vis previous survey. 62% of the passenger car dealers feel that their sales have increased as compared to the same period previous year.

§ A lower proportion of two wheeler and commercial vehicle dealers felt that their sales have improved compared to last year.

COMMERCIAL VEHICLES

DEFINITELY HIGHER HIGHER OR SAME SAME OR LOWER DEFINITELY LOWER

0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

15%

34%

34%

17%

41%

13%

33%

13%


34%

21%

30%

15%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

END OF Q4-2015

32%

14%

41%

13%

SALES INVENTORY PROFITS

COMMERCIAL VEHICLES

7PERFORMANCE

YEAR

DEALERSHIP


PREVIOUS

§ A higher proportion of dealers feel that their inventory levels had gone down compared to the same period last year.

§ Amongst the car dealers this feeling was unchanged the previous quarter.

§ 69% of the two wheeler dealers felt that their inventory levels had increased or remained same as compared to that in the previous quarter.

§ 55% of the surveyed commercial vehicle dealers felt that their inventory levels had either remained same or went up, compared to 69% who felt this way in the previous quarter.



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

38%

9%

19%

34%


27%

25%

43%

5%

END OF Q2-2015

END OF Q1-2015

21%

24%

50%

5%

END OF Q3-2015

END OF Q4-2015

23%

22%

48%

7%

23%

51%

20%

6%21%

48%

24%

7%19%

36%

36%

9%

COMMERCIAL VEHICLES

7PERFORMANCE

YEAR

DEALERSHIP


PREVIOUSSALES INVENTORY PROFITS

§ A lower proportion of surveyed dealers felt that their profits had increased since the previous quarter.

§ The above sentiments are reflected amongst two wheeler and commercial vehicle dealers.

§ 48% of passenger car dealers, 31% of two wheeler dealers and 27% of commercial vehicle dealers feel that their profits have either remained same or gone up since the previous quarter.



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

13%

27%

31%

29%

37%

9%

29%

25%


28%

15%

31%

26%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

END OF Q4-2015

35%

11%

31%

23%

13%

35%33%

19% 10%

21%

38%

31%

9%

18%

37%

36%

8PERFORMANCE

QUARTER

VIS-À-VIS

PREVIOUS

DEALERSHIP


§ Only 55% of the surveyed dealers felt that their sales in the Oct-Dec 2015 quarter were higher than Jul-Sep 2015 quarter.

§ Opinion of the passenger car dealers has not changed much since the past quarter.

§ At the end of Oct-Dec 2015 quarter, only 41% of the two wheeler dealers as compared to the 52% at the end of Jul-Sep 2015 quarter feel that their sales have gone up as compared to previous quarter.

§ Opinion of the commercial vehicle dealers is less positive this quarter.

0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

15%

27%

38%

20%

35%

12%

36%

17%

28%

22%

39%

11%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

33%

16%

39%

12%

END OF Q4-2015

COMMERCIAL VEHICLES




14%

47%

27%

12%24%

17%45%

14% 9%

46%36%

9%

COMMERCIAL VEHICLES


8PERFORMANCE

QUARTER

VIS-À-VIS

PREVIOUS

DEALERSHIP


§ 71% of the dealers feel that their inventory levels have gone up as compared to the previous quarter.

§ Opinion of the passenger car dealers and the commercial vehicle dealers has not changed much since the previous quarter.

§ A lesser number of two wheeler dealers feel that their inventory has remained same or increased since the last quarter (66% at the end of Oct-Dec 2015 quarter as compared to 72% of the dealers at the end of Jul-Sep 2015 quarter).


0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

26%

41%

23%

10%

30%

22%

39%

9%


24%

25%

47%

4%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

20%

23%

48%

9%

END OF Q4-2015

24%

51%

14%

11%28%

38%

31%

3%

9%

55%

27%

9%

COMMERCIAL VEHICLES

8PERFORMANCE

QUARTER

VIS-À-VIS

PREVIOUS

DEALERSHIP


§ Overall, the sentiment amongst the dealers is not positive about the profits this quarter vis-à-vis previous quarter.

§ A higher proportion of commercial vehicle dealers (55%) feel that their profits have either remain same or reduced as compared to the previous quarter (up from 43% who were of the same opinion at the end of Jul-Sep 2015 quarter).

§ Only half of the surveyed passenger car dealers feel that their profits have gone up as compared to the previous quarter.



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

13%

27%

34%

26%

36%

10%

30%

24%


31%

13%

39%

17%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

33%

14%

32%

21%

END OF Q4-2015

13%

37%32%

18% 21%

14%

34%

31%

9%

36%

36%

19%

9DEALERSHIP

MONTHS

EXPECTED

PERFORMANCEOVER NEXT SIX


§ Overall, 77% of the dealers are optimistic about the dealership sales in the next six months.

§ At the end of Oct-Dec 2015 quarter, a higher proportion of both passenger car dealers (83%) and the commercial vehicle dealers (91%) are optimistic about their sales in the next six months.

§ Sentiment of the two wheeler dealers about higher sales in the next six months is down from 60% at the end of Q3 2015 to 48% at the end of Q4 2015.

COMMERCIAL VEHICLES



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

17%

41%

30%

12%17%

23%

56%

4%


21%

26%

47%

6%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

20%

20%

57%

3%

END OF Q4-2015

21%

62%

15%

2%

14%

34%45%

7%18%

73%

9%

9DEALERSHIP

MONTHS

EXPECTED


COMMERCIAL VEHICLES


§ Higher inventory levels are expected by a high proportion of the surveyed dealers in the next six months.

§ Opinion of the passenger car dealers and the two wheeler dealers hasn’t changed much since the last quarter.

§ A higher proportion of commercial vehicle dealers expect their inventory levels to be higher in the next six months. (up from 57% at the end of Jul-Sep 2015 quarter to 73% at the end of Oct-Dec 2015 quarter).



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

26%

44%

22%

8%

21%

28%

48%

3%


18%

24%

56%

2%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

17%

27%

55%

1%

END OF Q4-2015

29%

55%

14%

2%

21%

55%

24% 18%

55%

27%

COMMERCIAL VEHICLES

9DEALERSHIP

MONTHS

EXPECTED



§ Overall, the sentiment about expected profits in the next six months has not changed much when compared with the opinion at the end of Jul-Sep 2015 quarter.

§ 72% of passenger car dealers expect higher profits in the next six months as compared to 73% dealers who were of the similar sentiment at the end of Q3 2015 quarter.

§ The optimism of the two wheeler dealers about the expected profits falls further (Only 38% of the surveyed two wheeler dealers are optimistic as compared to 40% at the end of the previous quarter).

§ Commercial vehicle dealers seems to be upbeat about the expected profits in the next six months (up from 43% at the end of Q2 2015 to 73% at the end of Q4 2015).



0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

14%

36%

30%

20%

23%

20%

47%

10%


28%

20%

44%

8%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

26%

20%

46%

8%

END OF Q4-2015

22%

50%

21%

7% 10%

28%

45%

17% 18%

55%

27%

34%

49%

13%

4%

28%

45%

24%

3%

27%

64%

9%

COMMERCIAL VEHICLES


10MANPOWER

MONTHS

EXPECTED

STRENGTHOVER NEXT SIX


§ A higher proportion of surveyed dealers expect higher manpower level in the next six month as compared to that at the end of the previous quarter.

§ There is slight increase in the optimism of both passenger car dealers and the two wheeler dealers as compared to that at the end of Q3 2015.

§ 91% of the commercial vehicle dealers expect their manpower levels to be higher in the next six months.

0%

20%

40%

60%

80%

100%

% O

F R

ESP

ON

DEN

TS

OVERALL

21%

48%

27%

4%

24%

20%

53%

3%


19%

41%

35%

5%

END OF Q3-2015

END OF Q2-2015

END OF Q1-2015

15%

33%

49%

3%

END OF Q4-2015


SSEWELLSGROUP

ABOUT

Sewells Group is a global consulting and outsourcing firm which specializes in the automotive retail industry. Our very reason for being in the business is to improve the performance of individuals and organizations in the automotive retail industry. We operate across the Asia-Pacific, Africa and Middle East regions.

Our in-depth subject matter expertise in this area and our deep engagements with many leading automotive brands make us a leader in our business. Our Integrated Dealer Performance Management Model has delivered exceptional success to leading OEMs across the world. Through our proven business management model, demonstrated competence solutions and process efficacy initiatives, we contribute meaningfully to our clients’ businesses.

For more information, visit www.sewellsgroup.com

Sewells Group Contacts:

PRADEEP SAXENAChairman & CEO - Sewells Group IndiaE: [email protected]: +91 12 44235641, M: +91 9810305854

UNNIKRISHNAN NAIRManager- Solutions Operation, Sewells GroupE: [email protected]: +91 8689820043


DISCLAIMER

§ The contents of this report represent the opinion of survey respondents, and not that of Sewells Group, Sewells Group India, any of their subsidiary companies, or employees thereof.

§ The contents of this report and analysis of responses received in response to the quarterly Automotive Dealer Confidence Index (ADCI) survey are to be viewed as broad trends being observed, and not as definite commentary on the state of economy, state of business or policy framework of any automotive manufacturer and/or franchised automotive dealer group.

§ The contents of this report should not be viewed as commentary on the prospects of a particular manufacturer or brand as it is only intended to summarize the perceptions and opinions of respondents.

§ The contents of the report and analysis of responses should not be viewed in isolation, but in conjunction with the number of responses considered in the computation of the index and subsequent analysis.

§ This survey may have limitation in terms of sample size for some segments or overall. We advise reader discretion in interpretation of results.

§ Sewells Group does not take the responsibility of or does not indemnify any user of the study against the impact of the decisions made using the findings of this study.

© 2015 Sewells Group

[email protected]

ASIA PACIFIC - AFRICA - MIDDLE EAST

sewellsgroup.com

http://www.twitter.com/sewellsgroup

http://www.linkedin.com/company/sewells-group

http://www.facebook.com/sewellsgroup

http://www.youtube.com/user/sewellsgroup

http://www.sewellsgroup.com