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Passenger Cars
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Profile of the Automotive IndustryVehicle sales in India in 2005 - 06
(in million)
1.14
0.35
7.05
0.36
0 2 4 6 8
Cars CVs Two wheelers Three Wheelers
Size of around USD 34
billion in 2006
The industry has grown at a CAGR of 14% p.a over the last 5 years, with total sales of vehicles
reaching around 9 million vehicles in 2005-06
The Indian auto industry has the potential to emerge as one of the largest in the world. Presently,India is
2nd largest two wheeler market in the world
4th largest commercial vehicle market in the world
11th largest passenger car in the world and is expected to be the 7th largest market
by 2016 The industry has emerged as a key contributor to the Indian economy
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Players in the Auto industry
Global
OEM
Domestic
OEM
Domestic
Suppliers
Global
Suppliers
Engineering
&
Development
Companies
Auto
Industry
GM
Toyota
Ford
Hyundai
Maruti Suzuki
HondaSkoda
Volvo
Mercedes
Tata Motors
Mahindra &
Mahindra
Bajaj Auto
TVS Motors
Hero HondaBajaj Tempo
Ashok Leyland
The auto industry is highly competitive with a number of
global and domestic auto companies present in the country.
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Current Scenario
5th largest commercial vehicle manufacturerin the world
4th largestcar market in Asia - crossed the 1 millionmark
Unlike the USA, the Indian passenger vehicle market isdominated by cars (79%)
India became the fastest growing car market in the worldin 2004, growth rate of 20%
India is the second-biggest market for small cars afterJapan
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Automobile Production Trends
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 500301 557410 782562 960487 1045881
Utility Vehicles 105667 114479 146325 182018 196371
MPVs 63751 51441 60673 67371 66661
Total Passenger Vehicels 669719 723330 989560 1209876 1308913
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Automobile Domestic Sales Trends
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 509088 541491 696153 820179 882094
Utility Vehicles 104253 113620 146388 176360 194577
MPVs 61775 52087 59555 65033 66366
Total PassengerVehicles 675116 707198 902096 1061572 1143037
Category 2001-02 2002-03 2003-04 2004-05 2005-06
Passenger Cars 49273 70263 125320 160670 170193
Utility Vehicles 3077 1177 3049 4505 4486
MPVs 815 565 922 1227 1093
Total Passenger Vehicles 53165 72005 129291 166402 175772
Automobile Exports Trends
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Key Players in the Indian Auto Industry -
Passenger Cars
The largest player in the Indian industry. Plans to launch new and
exciting products in the Indian markets, including the 1 lacs car
MUL is the largest passenger car manufacturer in India
The third largest passenger car manufacturer in India and one of the
largest exporters of vehicles. Has established India as one of itsmanufacturing bases in the world. Is planning to invest heavily to
boost exports from India.
Has vision of capturing 10% share of the Indian passenger car
market by 2010
One of the leading players in the Indian premium cars segment
One of the leading players in the Indian premium cars segment
http://www.toyotabharat.com/index.htmlhttp://www.toyotabharat.com/index.htmlhttp://www.india.ford.com/http://automobiles.honda.com/http://www.toyotabharat.com/index.htmlhttp://www.hyundai.co.in/index.asphttp://www.marutiudyog.com/index.asp -
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Key Players in the Indian Auto Industry -
Passenger Cars
One of the leading players in the Indian premium cars segment.
Plans to enter the small car segment by relaunching the Matiz
One of the largest domestic players in the UV / MUV segment
Tata Motors manages the marketing and distribution of the Fiat
branded cars through selected Tata outlets throughout India
E, C and S Class passenger cars are assembled in India,
other models are imported as completely built units
(CBUs) and retailed in India.
One of the original three car manufacturers in India, founded in
1942, it was a leader in car sales until the 1980s, when the industrywas opened up from protection HM has a joint venture with
Mitsubishi, producing versions of the Lancer & Pajero.
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Passenger Vehicle Clusters in India
Mumbai-Pune-Nasik
Aurangabad
Pithampur
Rajkot-Halol
Chennai-Bangalore-Hosur
Hyderabad
Jamshedpur
Kolkata
Delhi-Gurgaon-Noida-Ghaziabad
Hindustan Motors
Honda SIEL
Maruti Suzuki
Tata Motors
North/Central
Daimler ChryslerFIAT
GM
M & M
Skoda
Tata Motors
West
Ford
Hindustan Motors
Hyundai
Mahindra & Mahindra
Toyota Kirloskar
Volvo
South
Tata Motors
Hindustan Motors
East
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Segmentation (based on car prices)
Under Rs. 3 Lakhs Maruti 800AltoOmniReva
Rs. 3-5 Lakhs Ambassador Fiat Palio Hyundai SantroGetzChevrolet Opel CorsaMaruti ZenWagon RVersa
EsteemGypsyFord Icon & FiestaTata IndicaIndigoMahindra Bolero
Rs. 5-10 Lakhs Chevrolet SwingOptraTavera Hyundai Accent Elantra
Mahindra ScorpioMaruti BalenoToyota CorollaInnova
Tata Safari Mitsubishi Lancer Lancer CediaHonda City
Rs. 10-15 Lakhs Ford Mondeo & Endeavour Chevrolet Forester Skoda Octavia Classic & CombiHonda Civic &CR-V
Rs. 15-30 Lakh Maruti Suzuki Grand VitaraHyundai Sonata EmberaTerracan & Tucson Mitsubishi PajeroAudiA4 Opel Vectra Honda AccordMercedes C ClassToyota Camry
Rs. 30-90 Lakhs Audi A6 A8 & TT BMW X5 5 Series & 7 SeriesMercedes E Class, S Class, SLK, SL & CLS-Class
Porsche Boxster Cayenne 911 Toyota Prado
Above Rs. 1 Crore Bentley ArnageContinental GT & Flying Spur
Rolls Royce Phantom Maybach
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Regulations - Auto Policy
In 2002, the Central Government formulated an auto policy that
aimed at promoting an integrated, phased, enduring and self-sustained growth of the Indian automotive industry.
The Auto Policy allows automatic approval for foreign equityinvestment upto 100% in the automotive sector and does not laydown any minimum investment criteria.
The auto policy lays emphasis on R & D activities carried out bycompanies in India.
Weighted tax deduction of upto 150% for in-house research and R & Dactivities.
Formulation of an appropriate auto fuel policy to ensure availabilityof adequate amount of appropriate fuel to meet emission norms.
The auto policy confirms the governments intention on harmonizingthe regulatory standards with the rest of the world.
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Automotive Regulations Indian automotive regulations are closely aligned to the ECE regulations.
The table below shows the level of alignment of the Indian regulations withthe ECE regulations.
Status of Indian Regulation Number of regulations
Fully / Partially aligned 43
In process of being aligned 32
Items / Regulations to be covered 39
Total 114
The key regulations that are likely to impact the auto industry in the future are:
Crash-related regulations
Introduction of Bharat Stage IV norms
Source: IMaCS Analysis
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Future Regulations
Regulation Road Map Targets
Industry challenges to developmentBetter vehicles: more safer and
environmental friendly
Approach
Harmonization with ECE
standards
Homologation and
certification testing
agencies and centres
Crash requirements aligned with EUMandatory airbags
Emission standards: Bharat Stage IV
in Metros and Bharat Stage III in rest of
the country
2009
Presently, Bharat Stage III ( Equivalent to Euro III) is mandated in Metro and otherlarge cities and Bharat Stage II ( Equivalent to Euro II) is mandated for rest of the
country
Bharat Stage IV ( equivalent to Euro IV) is expected to be introduced in the large
Metros around 2009 and Bharat Stage III in the rest of the country
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Demand Drivers
The growth in domestic demand is driven by a number of
factors including: Overall economic growth
Rising income levels
Low cost of finance and easy availability of finance
Increased consumer awareness
Closer linkages with global auto trend leading to introduction of
contemporary models
Governments specific policy initiatives such as lower excise duties on
smaller cars
Increased job demands Growth of satellite towns
Onset of consumerism and travelling culture
Completion of Golden Quadrilateral project
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Key Success Factors Market Leaders Presence across segments - Manufacturers with presence across
various segments can ensure higher volumes and better capacity
utilization by using common manufacturing facilities.
Cost-competitive operations - Higher localization, reduction in the
vendor base, use of common components, manufacturing a larger
number of models on a single platform have helped bring down prices.
Wide dealer network- After sales service and access to original spareparts act as distinct advantages in the marketing of a model.
Easy availability of finance - MUL tied up with State Bank of India
(SBI) in June 2003 to offer finance to its rural and semi-urban
customers through the latter's 13,000 plus strong branch network.
Strong support from parent companies:
Strong brand
Strong financial and technological support
Access to latest technology for launching new models, enhanced export capability
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Customer Segmentation (by car ownership and use)
Individual customer
segment
Self employed persons Corporate Commercial
Common people who don't
fall under any specific
category/not covered by any
corporate scheme.
Car is purchased in the
name of the company -use
could be personal, official
or both.
Car is registered in the
name of the company at
the time of purchase.
Includes taxi and tourist
(TT) segment and the lease
rental segment.
Share
Around 55% in the overall
car demand - being thehighest in the mini and
compact segments.
Around 15% in the
overall car market sales -
relatively large share inthe executive and
premium segment.
15% to the overall car sales
- 28% of the sales in the
mid-size segment with agreater presence in the
HMS.
12% share in the overall car
sales with a greater share in
the compact and mid-sizesegment.
Demand Driver
Cost of ownership-price,
taxation, running cost,finance cost (highest
sensitivity)
Promotional efforts -
discounts, advertising
New model launches
Running cost instead of
financing cost
New models andvariants with improved
technology (improved
diesel technologies
CRDi & TDi)
Business expansion or
stagnation
Changes in depreciationand tax rules
Marketing schemes
Brand image of the car
manufacturer
Fuel cost per km, driven
by fuel efficiency (km per
litre) and cost of fuel (Rsper litre) drives demand, as
well as model preference
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Changing Dynamics of Segmental
Demand
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Player-wise Market Share
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Cars: Sales Trend and Market Share
(key segments)
A1:Mini A2:Compact A3:Midsize A4 Executive A5:Premium A6:Luxury
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Comparison Tests:
Differences in Marketing
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Hot Hatch Face-OffSuzuki Swift versus Hyundai Getz
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Background
Suzuki Swift
Esteem in India: known
overseas as Swift earlier
Now Suzukis Global Car
All new car launched at
Paris Auto show 04
Well appreciated in Europe.
Hyundai Getz
Not a very well-known
model
Few awards won here and
there. For example, Budget
car of the year by What
Car? (UK, 2003)
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Marketing: Swift
Buzz in the industry: Marutis first new car in two
decades!
Differentiating factor: Hot shot looks and also awards
in India (Car of the Year awards) USP: Killer Price!
OTL: TVCs that communicate hardly anything
BTL: Separate sections at showrooms
Personnel trained specially for Swift selling
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Marketing: Getz
Initially marketed as feature packed: failed
Now being marketed as a big, spacious car
USP: Space
Price about Rs. 50,000 more than the Swift
Not as successful as the Swift so far
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C
Segment Cars Competition
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Marketing: City
Fairly advanced stage of the product lifecycle:Growth/Maturity
Undergone a full makeover since its launch: all new citylaunched 4 years back
USP: Honda brand name
Advertising
Hi tech car: Honda name (esp. VTEC)
Rising diesel costs in India relative to petrol (so cost savingdue to diesel is unsustainable)
Quality (good scores on JD Power surveys): lowermaintenance costs overall in comparison
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Marketing: Fiesta
Newest in the line of made for India Ford cars
Exists as a hatchback in Europe, suitably modified for
India
Abhishek Bacchan (movie star in India) was hired as
brand ambassador Go fida campaign: a car that will bowl you over
this was the message communicated
Mileage: 31 kilometers/litre record (published
recently in an auto magazine)
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Marketing: Verna
Latest car from Hyundai, India.
(Originally) Intended as replacement for the Accent
sandwiched on both sides
Good features: Diesel economy with high technology
(VGT) and power (110 bhp / 24kgm).
Market responsetime will tell!
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D
Segment Cars
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Marketing: Octavia
Skodas first car in India: need to build the Skoda
brand first
Quality differentiator: Obsessed with quality, since1895 this was the tagline used
Built on the golf platformSkoda is part of the VWgroup
USP: Diesel economy (users have reported 19 km perlitre mileage)
Replacement of the Octavia (Skoda Laura) falls in thenext segment, i.e. competes with Honda Accord
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Marketing: Corolla
Best selling car in the world (over the years)
Not as successful as Toyota would like
Marketing changed over time
Initial: Successful people use Corolla
Now: Trying to cash in on its worldwide acceptance
Quality niggles (on a Toyota!) in the interior have
been a cause for complaint among owners
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Marketing: Civic
One of Hondas best selling brands worldwide:
eagerly awaited before its launch in India
Currently outsells the Corollain markets abroad,
too.
Brand communication: Pure Exhilaration taglineused to communicate sporty nature
Scores on the styling frontespecially the interior
Aggressive salespeople
Already the leading seller in the segment
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Future Trends Individual buyers, lease rental-based bulk buyers for high volume growth
More importance to fuel efficiency, adaptability with road condition, heavy traffic
Not many crave a status symbol small car is the choice of the hour
Government regulations favouring manufacturing of small cars
The development of a vibrant used car market will drive the growth of new car and
UV sales by
Helping owners: Dispose old car; Upgrade to a new car
Creating potential customers for new cars: Used car owners upgrade to new models
Demand from two-wheeler owners who want to upgrade to used cars
All major players to launch diesel variants and models with increasing frequency.
However, the following player initiatives will have a significant impact on diesel
share:
Maruti setting up an initial 100,000 diesel engine capacity by the end of 2006, which iteventually plans to expand to 300,000 units
Tata Motors' Rs 100,000 car, targeted for launch by mid-2008