impact of bugdet 2010 on automobile sector...sanjay parmar

8/14/2019 Impact of Bugdet 2010 on Automobile Sector...Sanjay Parmar

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BUDGET 2010Automobile Sector

Sanjay.S.Parmar

Roll. no :-25

MBA-Sem IV

IMR



Segment of Automobile Industry



Segment of Automobile Industry

Passenger vehicle s 15.96%

Commercial vehicle s 3.95%

Three vehicles 3.60%

Two vehicles 76.49%



Automobile Production Trends

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Passenger Vehicles 723,330 989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697

Commercial Vehicles 203,697 275,040 353,703 391,083 519,982 549,006 417,126

Three Wheelers 276,719 356,223 374,445 434,423 556,126 500,660 501,030

Two Wheelers 5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626

Grand Total 6,279,967 7,243,564 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479



Automobile Domestic Sales Trends

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Passenger Vehicles 707,198 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,551,880

Commercial Vehicles 190,682 260,114 318,430 351,041 467,765 490,494 384,122

Three Wheelers 231,529 284,078 307,862 359,920 403,910 364,781 349,719

Two Wheelers 4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,670

Grand Total 5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,723,391



Ranking

Fifth largest commercial vehicle market in the world.

Fourth largest passenger vehicle market in Asia

Second largest two-wheeler market in the world.

Largest three-wheeler market in the world.

Fourth largest tractor market in the world.



Expectation from Budget

Continuation of Stimulus Package for Commercial Vehicle Segment:- The continuation of the stimulus package that includes easier & softer loans, and concessional duties would help the segment recover.

Increased Export Promotion: - In order to boost their sales

Incentives to be Provided to Specialized Service CompaniesUndertaking R&D: - R&D for auto industry is crucial as it helps toimproving products and come up with innovative concepts. Budgetexpectations include specific tax breaks for R&D service providers.



Cont… Rapid Implementation of Goods & Services Tax (GST): - The

entire Indian auto industry has kept its fingers crossed for thetransparent, easy and simple indirect tax regime. The GSTshould be uniformly implemented across the states within thetimeline.

The GST aims to bring other taxes like excise, VAT, CST andother taxes under one umbrella and the GST rate may be lower than the combined total of the current taxes.



Cont… Reduction in the interests on car loan and two-wheeler loan. Lower

interest rate would attract more number of buyers.

Fears that small and big cars more expensive, as there is a possibilityof rolling back of stimulus package

The industry also expects an upward revision in service tax. It isanticipating a hike of 1-2% in the service tax.

- 2% hike in Cenvat may also be there, which would make smallcars costlier by Rs. 2,000 to Rs. 10,000.

-The price of two-wheelers may also rise from Rs. 600 to Rs.1,500



Impact of budget on sector

Announcement ImpactChange in incometax slab

Positive This will increase the disposableincome in the hands of people,supporting demand. Positive for two-wheelers and car manufacturers like

Bajaj Auto, Hero Honda, TVS Motors,Maruti Suzuki, Tata Motors and M&M

Rollback of exciseduty by 2% acrossthe spectrum

Negative Though the rollback of 2% is less thanthe expectation of 4%, it is negativefor all automobile manufacturers as

prices will rise on two-wheelers (Rs600- 1,500), three wheelers (Rs 1,700-5,000), small cars (Rs 3,000- 15,000),large cars (Rs 5,000- 50,000) and CVs(Rs 4,500- 50,000)

Rollback of exciseduty on steel

Negative Steel prices have already started risingand a further pass on due to a rise inexcise duties can pressurize margin of auto and ancillary companies



Cont…

Increase in spend onroad infrastructure andstate transport

Positive NHAI target of 20 km/dayreiterated. Allocation was up13%. Positive for M&M,Maruti Suzuki and HeroHonda

Rise in petrol anddiesel prices

Negative Fuels have not been sparedeither with Rs. 1 per liter excise duty being levied onPetrol and Diesel amountingto a price hike of Rs 2.67 a

liter on petrol and Rs 2.58 per liter for dieselVehicle running expenditureto rise



Effect on Market Market Reaction

Index Closed Points %ChangeBSE Sensex 16,429.55 +175.35 +1.08%

BSEAuto 7,195.71 +349.05 +5.10



Effect on Top company

Company Group Current Price(Rs)

Prev CloseChange % Change

Maruti

SuzukiIndia

BUY 1,463.55 1,401.05 +62.50 +4.46

Bajaj AutoLtd

BUY 1,817.40 1,714.60 +102.80 +6.00

Mahindra&

Mahindra

BUY 1,007.35 958.85 +48.50 +5.06

Ashok Leyland

BUY 49.75 46.80 +2.95 +6.30

TataMotorsLtd.

HOLD 711.05 668.70 +42.35 +6.33



Latest News as on 1st March 2010… Auto manufacturers have already announced hike in prices of

their products up to Rs. 70,000 due to rise in excise duty

Another round of price hike is due from April 2010 when theauto companies will pass on the cost to customers to upgradetheir vehicles according to the new emission norms.

Maruti has already hiked prices of its models by Rs. 3,000 to Rs.13,000.

Hyundai cars have also gone costlier from Rs 6500 to Rs. 25000.

Tata Heavy Vehicles have become expensive by Rs. 60,000 to

Rs. 70,000 while prices of Tata passenger vehicles have goneup by Rs. 5000 to Rs. 6000.

impact of bugdet 2010 on automobile sector...sanjay parmar

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