Automobiles Riding High on Demand

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Automobiles Riding High on Demand Market Survey By: DR A. rETHINAPANDY DR M. SELVAKUMAR AUTOMOBILES RIDING HIGH ON DEMAND Though it remains sensitive to hardening interest rates, automobile demand in India is very strong and expected to remain so on the back of a burgeoning middle class and growing number of millionaires. utomotive is one of the India, the industry is set to grow dustry has come a long way. Today, fastest growing indus- further. India is the largest three-wheeler tries of the world. With Since the launch of the first car market in the world and is expected more than two million in 1897, the Indian automotive in- to take over China as the second new automobiles roll- largest automobile market, in the Aing out each year on the roads of coming years. A number of domestic companies produce automobiles in India and India is expected to take over China as the second largest automobile market Market Survey Table I Table II in India, dominate the In- dian automotive industry. The timeline of indian Installed Capacities in the indian Automotive industry Automotive industry During 2006-07 Highlights of the Year Timeline Segment Installed capacity (million) industry 1897 First Person to own a car in 2005-06 2006-07 India—Mr Foster of Crompton Four wheelers 1.79 2.24 The automotive indus- Greaves Company, Mumbai try is growing 16 to 18 per Two and three wheelers 10.59 12.69 1901 First Indian to own a car in India cent annually. Today, India Engines 0.29 0.39 —Jamshedji Tata can produce every kind of 1905 First woman to drive a car in India Source: Society of Indian Automobile Manufacturers automobile, right from cars —Mrs Suzanne R.D. Tata and two-wheelers to heavy 1905 Fiat Motors exceed 100,000 units. vehicles. And not only Indians but for- 1911 First Taxi in India eigners too are investing their money 1924 Formation of traffic police The early days in the Indian industry. The growth of 1928 Chevrolet Motors the Indian automotive industry is evi- 1942 Hindustan Motors In 1953, the government of India dent from the following facts: and the Indian private sector initiat- 1. India is being recognised as a 1944 Premier Auto Limited ed manufacturing processes to help potential emerging auto market 1945 Tata Motors develop the automotive industry, 2. Foreign players are investing 1947 Mahindra Motors which had emerged by the 1940s in a in the Indian automotive industry 1948 Ashok Motors nascent form. Between 1970 and the 3. Within two-wheelers, motor- 1948 Standard Motors economic liberalisation of 1991, the cycles contribute 80 per cent of the 1974 Sipani Motors automotive industry grew at a slow segment size 1981 Maruti Suzuki pace due to government restrictions. 4. Unlike the USA, the Indian 1994 Rover Motors A number of Indian manufacturers passenger vehicle market is domi- 1994 Mercedes Benz appeared between 1970 and 1980. nated by cars (79 per cent) 1994 Opel Japanese manufacturers entered the 5. Tata Motors accounts for over Indian market, ultimately leading to 60 per cent of the Indian commercial 1995 Ford Motors the establishment of Maruti Udyog. vehicle market 1995 Honda SIEL The abolition of licence raj in 1991 6. Two-third of auto component 1995 Reva Electric Car Company opened the doors for international au- production is consumed directly by 1995 Daewoo Motors tomobile manufacturers. A number OEMs 1996 Hyundai Motors of leading global automotive compa- 7. India is the largest three- 1997 Toyota Kirloskar Motors nies entered into joint ventures with wheeler market in the world 1997 Fiat Motors (Re-Entry) domestic manufacturers of India and 8. India is the largest two-wheel- 1998 San Motors thus started the large-scale produc- er manufacturer in the world 1998 Mitsubishi Motors tion of automobiles in India. 9. India is the second largest trac- The Indian automotive industry, tor manufacturer in the world 2001 Skoda Auto which manufactures cars, buses, 10. India is the fifth largest com- 2003 Chevrolet three-wheelers, two-wheelers, com- mercial vehicle manufacturer in the 2009 Introduction of world’s cheapest mercial vehicles and heavy vehicles, world car Tata Nano provides employment to a large 11. The number one global mo- number of workforce. torcycle manufacturer has presence the growing presence of multina- Some of the well-known players in India tional investment, too, has led to an in the Indian automotive industry 12. India is the fourth largest car increase in overall growth. Follow- are Hindustan Motors, Maruti Ud- market in Asia. Recently, it crossed ing the economic reforms of 1991, yog, Fiat India, Ford India, General the one million mark. the Indian automotive industry has Motors and Toyota Kirloskar Mo- demonstrated sustained growth as a tor among others. The production of Production capacity result of increased competitiveness automobiles in India is carried out and relaxed restrictions. The month- mainly for the domestic customers. The automotive industry in In- ly sales of passenger cars in India Cars, with 79 per cent of automobiles dia is growing at a very high rate Market Survey with more than one million passen- Production trend Indian automotive industry to the ger vehicle sales per annum. More global market is very low. This is evi- and more foreign manufacturers Table III shows the production dent from the fact that production of are coming to India, while existing trend of the automotive industry. passenger and commercial vehicles companies are coming up with new For this purpose, the automotive in- in India constitutes just 2.37 per models. dustry is divided into four segments: cent of the world’s total production. India’s automotive industry is passenger vehicles, commercial vehi- Indian automotive exports are also now worth $34 billion and expected cles, two-wheelers and three-wheel- comparatively low. to grow to $150 billion in another ers. The production of passenger ve- ten years. The installed capacity hicles was 723,330 units in 2002-03, Market segment of the Indian automotive industry which increased to 1,838,697 units is shown in Table II. According to in 2008-09. Likewise, the production The market share of various com- this table, the installed production of commercial vehicles and two- and panies in the automotive industry is capacity of four-wheelers, two- and three-wheelers also increased over discussed under four heads: passen- three-wheelers, and engines was the period. The total production ger vehicles, utility vehicles, medium 2.24 million, 12.69 million and of automobiles reached 11,175,479 and heavy commercial vehicles, and 0.39 million, respectively, in March units in 2008-09. light commercial vehicles. 2007. However, contribution of the Passenger vehicles. In pas- Table III Automobile production in india (number of vehicles) Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Passenger vehicles Units 723,330 989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697 Growth (%) — 36.81 22.26 8.22 18.02 15.04 3.44 Commercial vehicles Units 203,697 275,040 353,703 391,083 519,982 549,006 417,126 Growth (%) — 35.02 28.60 10.57 32.96 5.58 –24.02 Three-wheelers Units 276,719 356,223 374,445 434,423 556,126 500,660 501,030 Growth (%) — 28.73 5.12 16.02 28.01 –9.97 0.07 Two-wheelers Units 5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626 Growth (%) — 10.77 16.13 16.52 11.28 –5.20 4.88 Source: Society of Indian Automobile Manufacturers Table IV Domestic Sales of Automobiles (number of vehicles) Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Passenger vehicles Units 707,198 902,096 1,061,572 1,143,076 1,379,979 1,549,882 1,551,880 Growth (%) — 27.56 17.68 7.68 20.73 12.31 0.13 Commercial vehicles Units 190,682 260,114 318,430 351,041 467,765 490,494 384,122 Growth (%) — 36.41 22.42 10.24 33.25 4.86 –21.69 Three-wheelers Units 231,529 284,078 307,862 359,920 403,910 364,781 349,719 Growth (%) — 22.70 8.37 16.91 12.22 –9.69 –4.13 Two-wheelers Units 4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,249,278 7,437,670 Growth (%) — 11.47 15.76 13.57 11.63 –7.91 2.60 Grand total Units 5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,654,435 9,723,391 Growth (%) — 14.63 15.96 12.77 13.67 –4.64 0.71 Source: Society of Indian Automobile Manufacturers Market Survey senger vehicles, Maruti Udyog is still Light commercial vehicles. automobiles registered robust growth the leader with around 52 per cent In passenger carriers segment, Tata rates of 56.17 per cent in 2003-04 and market share followed by Hyundai Motors leads with 46 per cent share 23.61 per cent in 2008-09 (Table VI). Motors with 19 per cent and Tata followed by Mahindra and Mahin- In terms of units, all the segments Motors with 16 per cent. Other play- dra, Swaraj Mazda and Force Mo- showed increase in exports. Passen- ers in this segment are Honda Siel tors. Goods carrier segment is also ger vehicle exports increased five- Cars and Ford India. led by Tata Motors with 58 per cent fold. Exports of commercial vehicles Utility vehicles.
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