October 2014 Seoul

State of the Indian Automobile Industry Latest Performance Review

SIAM Society of Indian Automobile Manufacturers Performance & Growth

A Presentation SIAM 2 Domestic Sales (number of vehicles) Passenger Vehicles : 2.5 Mn Commercial Vehicles : 0.63 Mn 2 Wheelers : 14.8 Mn 3 Wheelers : 0.48 Mn

Industry Estimates Employment (Direct + Indirect) : 2 Mn+27 Mn Contribution to manufacturing GDP : 47.3% Investment from FY 09 - FY 14 : USD 13.5 Bn

A SIAM Presentation Source: SIAM, IMACs 3 Segmentation: By Volume Segmentation: By Value

Passenger Vehicles Commercial Vehicles (2,503,685) (632,738) 14% 3% 3% Three Wheelers (479,634) 51%

28%

19% 80% 2%

Two Wheelers (14,805,481)

Passenger Vehicles Commercial Vehicles Three Wheelers Two Wheelers A SIAM4 Presentation Source: SIAM SIAM Hindustan Motor Finance Force India Corporation Volkswagen Automobiles, Motors 2.28 Ltd 0.06 India Pvt Ltd 0.42 0.11 0.02 1.62 Ford Kirloskar Motor India, Skoda Auto India 0.01 5.36 3.29 0.58 5.84 Honda India India 7.04 1.68 Hyundai Motor India Motor 16.21 India 2.06

Isuzu Motors India 0.01

Mahindra & Mahindra Maruti India 8.84 44.58 VECVs – Volvo 0.16 VECVs – Eicher AMW Motors Ashok Leyland 6.01 0.56 13.48

Force Motors 3.50

Isuzu Motors India 0.12

Mahindra & Mahindra 25.72

Tata Motors 47.40

Piaggio Vehicles SML Isuzu 1.03 2.04 Alto Swift Sl. Models Sep No 2014 (Sales Nos) Dzire Wagon R

1 Maruti 19,906

2 Maruti 17,265 Grand i10 Elite i20 3 Maruti 16,964

4 Wagon R 15,641

5 Hyundai Elite i20 8,902

6 8,541 Bolero Omni

7 Hyundai Grand i10 7,285

8 Maruti Suzuki Omni 6,659 Eon 9 Hyundai Eon 6,489 Celerio

10 Maruti 6,382 Category Model September 2014 A: Passenger Cars Micro 1,703 19,906 Compact Maruti Suzuki Swift 17,265 Super Compact Toyota Etios 1,638 Mid-Size Honda City 4,600 Executive 791 Premium Skoda Superb 125 B: Utility Vehicles(UVs) UV1 Mahindra Bolero 6,850 UV2 Mahindra Scorpio 6,060 UV3 Force Trax 299 UV4 Toyota Fortuner 1,745 UV5 Toyota Land Cruiser 10 C: Vans V1 Maruti Suzuki Omni 6,659 V2 Tata ACE Magic 1,566 Items Unit 2003-04 2013-14 Growth

Total Volume (in numbers) ‘000 6,811 18,422 2.7x

Passenger Vehicles ‘000 902 2,504 2.8x

Commercial Vehicles ‘000 260 633 2.4x

Two Wheelers ‘000 5,364 14,805 2.8x

Three Wheelers ‘000 284 480 1.7x

Domestic Sales Revenue (OEM) US $ billion 15 40 2.7x

Vehicles Exports Revenue US $ billion 1 8 7.2x

Share of GDP % 4.5% 7.1% 1.6x

(1 USD @ Rs. 60) A SIAM Presentation Source: SIAM, IMACs 9 Production (January -December ) Data in units 2012 2013 % Change Passenger Cars (1)* 3,296,240 3,138,988 -4.77 Commercial Vehicles (2) 878,473 741,950 -15.54 Total Motor Vehicles (1)+(2) 4,174,713 3,880,938 -7.04 Domestic Sales (January -December ) Data in units 2012 2013 % Change Passenger Cars (1)* 2,753,161 2,553,979 -7.23 Commercial Vehicles (2) 813,821 687,230 -15.56 Total Motor Vehicles (1)+(2) 3,566,982 3,241,209 -9.13 Exports (January -December ) Data in units 2012 2013 % Change Passenger Cars (1)* 551,522 593,453 7.60 Commercial Vehicles (2) 89,221 72,170 -19.11 Total Motor Vehicles (1)+(2) 640,743 665,623 3.88 Note: * BMW, Mercedes, Audi and JLR data not reported Production (January -September) Data in units 2013 2014 % Change Passenger Cars (1)* 2,407,278 2,388,674 -0.77 Commercial Vehicles (2) 585,855 517,323 -11.70 Total Motor Vehicles (1)+(2) 2,993,133 2,905,997 -2.91 Domestic Sales (January -September) Data in units 2013 2014 % Change Passenger Cars (1)* 1,927,176 1,927,917 0.04 Commercial Vehicles (2) 543,251 455,633 -16.13 Total Motor Vehicles (1)+(2) 2,470,427 2,383,550 -3.52 Exports (January -September) Data in units 2013 2014 % Change Passenger Cars (1)* 452,001 447,721 -0.95 Commercial Vehicles (2) 53,399 63,815 19.51 Total Motor Vehicles (1)+(2) 505,400 511,536 1.21 Note: * BMW, Mercedes, Audi and JLR data not reported Facing slowdown over the last 2-3 years Domestic Sales (number of vehicles) CAGR CAGR Vehicle Segment (‘000) FY 02 FY 12 FY 14 FY 02-12 FY 12-14 Passenger Vehicles 686 2,629 14.4% 2,501 -2.5%

Commercial Vehicles 136 833 19.9% 633 -12.8%

Early signs of domestic demand recovery Domestic Sales (number of vehicles) CAGR CAGR Growth Vehicle Segment (‘000) FY 02 FY 12 FY 14 FY 02-12 FY 12-14 6m FY 15

Passenger Vehicles 686 2,629 14.4% 2,501 -2.5% 4.3%

Commercial Vehicles 136 833 19.9% 633 -12.8% -10.1%

A 12SIAM Presentation Source: SIAM

Passenger Vehicle Sales ‘000s

F14 F15

1,252

1% 7% 4%

637 637

615 615

Q1 Q2 H1

Passenger Vehicles-Trends

PVs=Cars + UVs + Vans- Trends

• 4% in H1 F15 over H1 F14

A SIAM Presentation

Commercial Vehicles‘000s

294 294

F14 F15

-16% -4% -10%

152 152

141 141

Q1 Q2 H1

CVs-Trends

• -10% in H1F15 over H1 F14

A SIAM Presentation Q2 Exports ‘000s 178 166 Q2 F14 Q2 F15

-7% 11%

20 23

PVs CVs

Exports as a % of Production in Q2 20% 13%

Source: SIAM Data A SIAM Presentation 15 F15 Outlook

A Presentation SIAM 16 Sensex Foreign financial investment (FIIs)

10000 All time 9304 high 9000

30.0 27.2 8000

26.6 25.4 25.9 24.2 Milliers 25.0 7000 22.4 22.4 7 times high 21.1 20.5 6000 20.0 5000

15.0 4000 3422 3000

10.0 Million $ inflow, FII Net 2000 1258 5.0 1000 711

0 0.0 2011-12 2012-13 2013-14 2014-15

April - August

Jul-14

Jan-14

Jun-14

Apr-14

Feb-14

Aug-14

Mar-14

May-14 Sep -14 Sep Monthly (Till date)

A SIAM17 Presentation Source: CMIE SIAM GDP recovery Some respite in Inflation

6.0 5.7 12.0 5.2 10.7 10.4 10.2 10.1 5.0 9.9 4.6 4.7 4.6 4.6 10.0 9.5 9.7 4.5 4.4 4.4

8.4 8.1

4.0 8.0

3.0 6.0 CPI YoY, % YoY, CPI

Growth YoY, % YoY, Growth 2.0 4.0

1.0 2.0

0.0 0.0

Jun-12 Jun-13 Jun-14

Jun-12 Jun-13 Jun-14

Sep-12 Sep-13

Sep-12 Sep-13

Dec-12 Dec-13

Dec-12 Dec-13

Mar-13 Mar-14

Mar-13 Mar-14

Source: CMIE A SIAM18 Presentation SIAM Current account deficit Business confidence index

7 6.49

6 160 143 4.95 140 135 4.78 127 127 5 125 122 120 118 120 114 3.98 4 103 3.49 100

3 80

BCIQuarterly 60 2 1.65 1.2 40 0.87 Current account deficit % of GDP of % deficit account Current 1 0.24 20

0 0

Jun-12 Jun-13 Jun-14

Sep-12 Sep-13

Dec-12 Dec-13

Jul-13 Jul-12 Jul-14

Mar-13 Mar-14

Jan-13 Jan-14

Oct-12 Oct-13

Apr-12 Apr-13 Apr-14

Source: CMIE and NCAER A SIAM19 Presentation SIAM  Some early signs of revival in demand. However business environment continues to be challenging ◦ Economic growth – Seen improving but still to take root ◦ Inflation – still not under control ◦ Vehicle finance rates – Continues to be high ◦ Consumer Sentiment - Significantly Improved ◦ Product Offering - Number of new models launched

 Key Concerns ◦ Commercial vehicle segment continues to be strained but improving ◦ High inflation ◦ Vehicle finance rates high ◦ FOREX rate fluctuation ◦ Higher Excise duty rates expected to be reinstated in January 2015

A Presentation SIAM 20 Need to watch economic growth trend, inflation, interest rates, fuel prices and commodity prices. Also, need to watch Government policy initiatives in terms of project implementation, infrastructure development and revival in mining activity. Industry needs to grow at a pace much faster than in recent times to get back to growth path.

A Presentation SIAM 21 A Presentation SIAM 22 • A key objective is to address India’s increasing crude oil deficit, which poses a serious challenge to its fuel security • Concerted efforts are required across a range of solutions to meet India’s fuel security objective • Alternate mobility solutions include xEVs such as HEV, PHEV, ER-EV and BEV • xEV and CNG adoption could help meet our objective of fuel security through significant fuel savings • Apart from regulations, cost of batteries is a key factor in xEV demand, which is expected to decline substantially by 2020

A SIAM Presentation  To achieve the desirable outcomes stated in NEMMP 2020, Government of India, will focus on four broad areas:  Demand creation through:  Incentives (cash subsidy) for various xEVs  Mandates for some segments such as public transport vehicles  On road vehicles through hybrid retrofitment  Domestic manufacturing through:  Linking incentives with localization content in a phased manner  Various tax rebates such as excise duty, corporate tax  Research, Development & Demonstration through:  Creating Centre of Excellence for accelerated development and tangible outcomes of research work at component level  Pilot projects to test and assess the impact of xEVs and spread awareness  Infrastructure creation through PPP or private players for:  Power infrastructure  Charging infrastructure

A SIAM Presentation

 The Government has set up a robust mechanism for disbursement of incentives, for ensuring quality of products and for value addition in the country.

a) b) - c)

A SIAM Presentation 6~7 Million (YoY)

xEV Sales by 2020

xEV Decrease 15 Million Sales Till 24 Mi in CO 2020 2 Ton Potential

Fuel Jobs 250,000~300,000 Savings 9500 Mi Liters

A SIAM Presentation . Incentives to consumers based on Life Cycle Analysis (TCO Modeling) and Projected Desirable Sales.

. All segments (Inclusive) and technology types (Technology Neutral). Prioritization of vehicle segments based on two broad objectives of maximizing potential for fuel savings and potential for mass adoption.

. Setting-up Qualifying Criteria focusing on Quality (Safety and Emissions), Performance (Fuel Savings) & Value Addition (Make in India)

. Setting-up an e-Enabled Incentive Delivery Mechanism to create efficient and robust mechanism.

. Fiscal support in terms of tax policies – import and excise duty rebate aiming at promoting domestic manufacturing

. PPP in R&D and Charging Infrastructure.

A SIAM Presentation SIAM Society of Indian Automobile Manufacturers

A Presentation SIAM 28