Cars and SUVs

Analysis of CARS AND UV’S Industry

• Segmentwise Domestic Sales : 3• Player-wise Domestic Sales : 10• Player-wise Domestic Market Share : 12• Player-wise Domestic Sales : 14• Player-wise Model Wise Domestic Sales : 16• Cars Modelwise Sales : 21• Passenger Car Annual : 27• Alternative Fuels : 29• Evolving Technologies : 40• Key Global Markets-Overall : 60• Key Global Markets-US : 66• Key Global Markets-Western Europe : 78• Key Global Markets-China : 87• Launch of Honda Amaze : 95• Launch of Ford Ecosport : 110• Fuel Mix In Passenger Vehicles : 126• Used Car Market-Demand Review & Outlook : 146

Table of Contents

• Used Car Market-Industry Structure : 158• Used Car Market-Dealer Profitability : 166• Summary : 174• Demand Domestic : 178• Demand Exports : 203• Realizations : 219• Input Costs : 223• Margins : 228• Supply : 241• Short Term Demand Trends : 254• Player Profiles• Maruti : 275• Hyundai : 289• Mahindra : 300• Tata Motors : 311

Table of Contents

Segmentwise domestic sales

Passenger cars: Segment-wise domestic sales

Segment Player 2010-11 2011-12 2012-13 Micro Tata Motors 70,432 74,527 53,848 Micro Total 70,432 74,527 53,848 Mini General Motors India Ltd. 34,603 23,184 7,790

Hyundai Motors India Ltd. 82,971 127,441 132,665 Maruti Suzuki India Ltd. 573,238 491,389 429,569

Mini Total 690,812 642,014 570,024 Compact Fiat India Ltd. 11,760 11,415 5,432

Ford India Ltd. 78,116 70,052 60,964 General Motors India Ltd. 37,218 51,597 50,494 Honda SIEL Cars India Ltd. 4,862 14,635 41,350 Hyundai Motors India Ltd. 240,567 201,133 184,297 Maruti Suzuki India Ltd. 261,799 235,754 255,302 Nissan Motor India Pvt. Ltd. 12,315 18,633 11,449 Renault - 1,993 5,588 Skoda Auto India Pvt. Ltd 11,078 14,936 3,343 Tata Motors 142,684 163,174 113,271 Toyota Kirloskar Motor Ltd. - 31,761 27,596 Volkswagen 28,904 39,465 36,847

Compact Total 829,303 854,548 795,933 Super Compact Hyundai Motors India Ltd. 15,404 8,839 2,931

Mahindra & Mahindra Ltd. 10,009 17,839 15,348 Maruti Suzuki India Ltd. 107,955 110,132 169,571 Toyota Kirloskar Motor Ltd. 8,101 50,157 38,655 Volkswagen 398 59 1

Cars New format

Segment Player 2010-11 2011-12 2012-13

Super Compact Total 141,867 187,026 226,506

Mid-Size Ford India Ltd. 17,279 20,371 14,807 General Motors India Ltd. 3,586 1,325 4,877 Hindustan Motors 7,040 2,852 3,414 Honda SIEL Cars India Ltd. 46,631 35,906 30,530

Hyundai Motors India Ltd. 19,695 49,557 58,063

Maruti Suzuki India Ltd. 23,317 17,997 6,707

Nissan Motor India Pvt. Ltd. - 14,161 23,998 Renault - - 5,630 Skoda Auto India Pvt. Ltd - 8,852 19,979

Tata Motors 42,588 20,265 7,573

Volkswagen 18,380 34,067 24,585

Mid-Size Total 178,516 205,353 200,163 Executive Audi 707 344 -

BMW India Pvt. Ltd. 1,105 435 -Daimlerchrysler India Ltd. 1,278 567 -Fiat India Ltd. 9,352 4,245 1,501 General Motors India Ltd. 11,512 10,743 4,059 Hindustan Motors 165 102 71 Honda SIEL Cars India Ltd. 5,012 2,296 685 Hyundai Motors India Ltd. 2 - 4,556 Maruti Suzuki India Ltd. 138 458 188 Renault - 1,308 1,669 Skoda Auto India Pvt. Ltd 6,598 5,466 2,709 Toyota Kirloskar Motor Ltd. 10,707 8,904 5,348

Passenger cars: Segment-wise domestic salesCars New format

Segment Player 2010-11 2011-12 2012-13

Executive Total 49,797 37,974 23,696

Premium Audi 488 96 -

BMW India Pvt. Ltd. 1,080 528 -

Daimlerchrysler India Ltd. 1,078 308 -

Honda SIEL Cars India Ltd. 2,446 1,271 617

Hyundai Motors India Ltd. 265 198 339

Nissan Motor India Pvt. Ltd. 242 171 57

Skoda Auto India Pvt. Ltd 4,017 3,080 1,910

Toyota Kirloskar Motor Ltd. 417 147 401

Volkswagen 662 1,562 1,034

Premium Total 10,695 7,361 4,358

Luxury Audi 5 5,777 6,901

BMW India Pvt. Ltd. 249 8,216 6,129

Daimlerchrysler India Ltd. 272 6,452 5,006

Tata Motors - - 1,243

Volkswagen 42 7 2

Tata-JLR - 796 354

Volkswagen-Porsche - - 220


Segment Player 2010-11 2011-12 2012-13

Luxury Total 568 21,248 19,855

Coupe Audi 5 8 -BMW India Pvt. Ltd. 50 7 -

Daimlerchrysler India Ltd. 103 25 -

Nissan Motor India Pvt. Ltd. 10 6 -

Coupe Total 168 46 -

Exotics Daimlerchrysler India Ltd. - 2 -Exotics Total - 2 -

Grand Total 1,972,158 2,030,099 1,894,383

Note:

1) Numbers for Audi, BMW and Mercedes are available only from April to September for the years 2010-11 & 2011-12

2) Totals will not match SIAM numbers on account of restatement of data by SIAM

3) Since SIAM has reclassified figures from April 2011 onwards, previous years figures in the new classification is not

available



Cars old formatSegment Player 2006-07 2007-08 2008-09 2009-10 A1: Mini 79,245 69,553 49,383 63,378

Maruti Suzuki India Ltd 79,245 69,553 49,383 33,028 Tata Motors Ltd. - - - 30,350

A2: Compact 752,916 858,801 885,639 1,128,977 Fiat India Ltd. 1,614 3,356 3,544 13,676 Ford India Ltd. - 1,636 1,929 7,825 General Motors India Ltd. 2,399 33,583 39,715 61,022 Honda SIEL Cars India Ltd. - - - 7,541 Hyundai Motors India Ltd. 163,838 182,775 212,001 284,109 Nissan Motors Ltd - - 633,190 Maruti Suzuki India Ltd 440,375 499,280 511,396 -Skoda Auto India Pvt. Ltd - 2,658 5,801 6,501 Tata Motors Ltd. 144,690 135,513 111,253 114,415 Volkswagen India Pvt Ltd - - - 698

A3: Mid-size 197,064 225,614 241,683 276,294 Audi India Ltd - - - -BMW India Pvt. Ltd. - - - 46Fiat India Ltd. 584 81 - -Ford India Ltd. 39,822 29,333 23,267 26,499 General Motors India Ltd. 10,726 5,624 3,004 3,793 Hindustan Motors Ltd 12,481 11,005 7,098 9,037 Honda SIEL Cars India Ltd. 40,464 40,521 38,215 45,028 Hyundai Motors India Ltd. 28,980 32,791 31,579 30,418 Mahindra & Mahindra Ltd. - 25,891 13,423 5,332 Maruti Suzuki India Ltd 29,697 49,335 75,928 99,315 Nissan Motors Ltd - - - -Skoda Auto India Pvt Ltd - - - -Tata Motors Ltd. 34310 31033 49169 56634Toyota Kirloskar Motor Ltd - - - -Volkswagen India Pvt Ltd - - - 192

Segment Player 2006-07 2007-08 2008-09 2009-10 A4: Executive 40,964 42,185 33,638 46,437

Audi India - - - 293 BMW India Pvt. Ltd. - 901 1,075 1,517 Fiat India Ltd. - - 4,509 11,128 General Motors India Ltd. 3,861 6,058 3,204 5,821 Honda SIEL Cars India Ltd. 16,261 16,723 7,851 5,985 Hyundai Motors India Ltd. 1,482 203 19 -Maruti Suzuki India Ltd - - - -Mercedes-Benz India Pvt Ltd 868 1,153 1,531 1,675 Skoda Auto India Pvt. Ltd 11,709 10,943 7,380 7,831 Toyota Kirloskar Motor Ltd. 6,783 6,204 8,069 9,743 Volkswagen Group Sales India - - - 2,444

A5: Premium 5,970 6,130 9,039 11,898 Audi India Ltd - - 671 1,202 BMW India Pvt Ltd - 850 1,388 1,509 Honda SIEL Cars India Ltd. 2,727 2,129 4,107 2,775 Hyundai Motors India Ltd. 570 538 431 440 Mercedes-Benz India Pvt Ltd 937 1,034 1,160 1,438 Nissan Motor India Pvt. Ltd. - - 56 207 Skoda Auto India Pvt. Ltd 735 586 713 3,170 Toyota Kirloskar Motor Ltd. 1,001 993 513 397 Volkswagen Group Sales India - - - 760

A6: Luxury 249 819 1,092 1,353 Audi India - - 333 466 BMW India Pvt. Ltd. - 297 279 389 Mercedes-Benz India Pvt Ltd 249 522 480 498 Volkswagen India Pvt Ltd - - - -


Cars old format

Playerwise domestic sales

Cars: player-wise domestic sales

(Units) 2008-09 2009-10 2010-11 2011-12 2012-13

Passenger cars total 1,220,474 1,526,259 1,972,158 2,030,099 1,894,383

Audi 1,004 1,532 1,205 6,225 6,901

BMW India Pvt. Ltd. 2,742 3,461 2,484 9,186 6,129

Daimlerchrysler India Ltd. 3,171 3,611 2,731 7,354 5,006

Fiat India Ltd. 8,053 24,806 21,112 15,660 6,933

Ford India Ltd. 25,196 34,290 95,395 90,423 75,771 General Motors India Ltd. 45,923 70,636 86,919 86,849 67,220

Hindustan Motors 7,098 9,038 7,205 2,954 3,485

Honda SIEL Cars India Ltd. 50,173 61,329 58,951 54,108 73,182 Hyundai Motors India Ltd. 244,030 314,967 358,904 387,168 382,851

Mahindra & Mahindra Ltd. 13,423 5,332 10,009 17,839 15,348

Maruti Suzuki India Ltd. 636,707 765,526 966,447 855,730 861,337 Nissan Motor India Pvt. Ltd. 56 126 12,567 32,971 35,504

Renault - - - 3,301 12,887

Skoda Auto India Pvt. Ltd 13,894 17,502 21,693 32,334 27,941 Tata Motors 160,422 201,399 255,704 257,966 175,935

Toyota Kirloskar Motor Ltd. 8,582 10,140 19,225 90,969 72,000

Volkswagen - 2,564 51,607 78,266 65,379

Tata-JLR - - - 796 354 Volkswagen-Porsche - - - - 220 Note:

1) Numbers for Audi, BMW and Mercedes are available only from April to September for the years 2010-11 and

2011-12 2) Totals will not match SIAM numbers on account of restatement of data by SIAM

Playerwise domestic market share

Cars: player-wise domestic market share

(Units) 2008-09 2009-10 2010-11 2011-12 2012-13 Passenger cars total 100.0 100.0 100.0 100.0 100.0 Audi 0.1 0.1 0.1 0.3 0.4 BMW India Pvt. Ltd. 0.2 0.2 0.1 0.5 0.3 Daimlerchrysler India Ltd. 0.3 0.2 0.1 0.4 0.3 Fiat India Ltd. 0.7 1.6 1.1 0.8 0.4 Ford India Ltd. 2.1 2.2 4.8 4.5 4.0 General Motors India Ltd. 3.8 4.6 4.4 4.3 3.5 Hindustan Motors 0.6 0.6 0.4 0.1 0.2 Honda SIEL Cars India Ltd. 4.1 4.0 3.0 2.7 3.9 Hyundai Motors India Ltd. 20.0 20.6 18.2 19.1 20.2 Mahindra & Mahindra Ltd. 1.1 0.3 0.5 0.9 0.8 Maruti Suzuki India Ltd. 52.2 50.2 49.0 42.2 45.5 Nissan Motor India Pvt. Ltd. 0.0 0.0 0.6 1.6 1.9 Renault - - - 0.2 0.7 Skoda Auto India Pvt. Ltd 1.1 1.1 1.1 1.6 1.5 Tata Motors 13.1 13.2 13.0 12.7 9.3 Toyota Kirloskar Motor Ltd. 0.7 0.7 1.0 4.5 3.8 Volkswagen - 0.2 2.6 3.9 3.5 Tata-JLR - - - 0.0 0.0 Volkswagen-Porsche - - - - 0.0 Note:1) Numbers for Audi, BMW and Mercedes are available only from April to Septemberfor the years 2010-11 and 2011-12 2) Totals will not match SIAM numbers on account of restatement of data by SIAMSource: SIAM, CRISIL Research

UVs-Playerwise domestic sales

Utility vehicles: player-wise domestic sales

(Units) 2008-09 2009-10 2010-11 2011-12 2012-13

Utility vehicles total 331,820 422,826 529,774 599,512 790,958

Audi - - 687 387 -

BMW India Pvt. Ltd. 296 480 190 462 -

Daimlerchrysler India Ltd. 44 149 197 130 -

Force Motors Ltd. 5,063 5,917 3,667 5,234 4,562

Ford India Ltd. 2,780 2,597 3,142 2,242 1,454

General Motors India Ltd. 15,603 16,458 20,067 23,201 20,930

Hindustan Motors 2,095 1,676 2,569 1,969 2,104

Honda SIEL Cars India Ltd. 2,246 474 512 312 301

Hyundai Motors India Ltd. 50 14 462 1,611 760

International Cars & Motors Ltd. 3,489 847 652 483 260

Mahindra & Mahindra Ltd. 106,379 150,627 171,304 227,861 295,363

Maruti Suzuki India Ltd. 85,405 105,257 166,292 150,586 189,709

Nissan Motor India Pvt. Ltd. 10 180 460 290 1,451

Renault - - - 365 39,576

Skoda Auto India Pvt. Ltd - - 1,278 1,755 1,126

Tata Motors 70,050 84,447 93,429 113,384 139,772

Toyota Kirloskar Motor Ltd. 38,310 53,703 64,863 69,234 93,504

Volkswagen - - 3 6 86

UV_Player-wise model wise domestic sales

Utility Vehicles: Player-wise model sales

Company Model 2008-09 2009-10 2010-11 2011-12 2012-13 Audi 390 649 1,156 943 -

Q5 195 616 554 -Q7 390 454 540 389 -

BMW India Pvt. Ltd. 296 480 985 2,039 -X1 542 1,816 -X3 97 76 17 73 -X5 199 277 243 83 -X6 127 183 67 -

Daimlerchrysler India Ltd. 107 149 685 343 -G Class 3 59 -GL 12 239 55 -M Class 107 137 405 223 -R Class 38 6 -

Force Motors Ltd. 5,266 5,959 8,849 8,487 10,201 Force One 289 907 Traveller 581 41 798 -Trax 4,685 5,918 8,849 7,400 9,294

Ford India Ltd. 2,780 2,598 3,142 2,242 1,454 Endeavour 2,780 2,598 3,142 2,242 1,454

General Motors India Ltd. 15,604 16,458 20,063 23,217 20,930 Captiva 2,134 1,124 1,732 1,125 477 Tavera 13,470 15,334 18,331 22,092 20,453


Company Model 2008-09 2009-10 2010-11 2011-12 2012-13

Hindustan Motors2,054 1,711 2,581 1,977 1,958

Montero 138 56 69 86 15 Outlander 278 412 1,253 320 80 Pajero 1,638 1,243 1,259 1,571 1,863

Honda SIEL Cars India Ltd. 2,245 474 516 319 301 CR-V 2,245 474 516 319 301

Hyundai Motors India Ltd. 50 14 467 1,611 760 Santa Fe 467 1,611 760 Tuscon 50 14 - -

International Cars Ltd. 3,487 1,011 564 337 50 Rhino 3,487 1,011 564 337 50

Mahindra & Mahindra Ltd. 93,165 139,704 158,626 193,292 256,535 Bolero 55,924 73,824 83,130 100,797 117,665 Scorpio 29,995 36,973 43,439 50,985 50,168 XUV5oo - - - 13,819 45,418 Xylo 7,246 28,907 32,057 27,691 25,067 Quanto - - - - 16,434 Rexton - - - - 1,783

Maruti Suzuki India Ltd. 8,929 3,983 5,666 6,525 79,192 Ertiga - - - 1,117 76,375 Gypsy 7,219 3,841 5,570 5,381 2,804 Versa 1,440 51 8 - -Vitara 270 91 88 27 13

Company Model 2008-09 2009-10 2010-11 2011-12 2012-13 111 212 479 290 1,443

Nissan X-Trail 111 212 479 290 49 Evalia - - - - 1,394

Precision Cars India Private Ltd. 64 64 113 207 -Cayenne 64 64 113 207 -

Renault India - - - 367 39,576 Koleos - - - 367 388 DUSTER - - - - 39,188

Skoda Auto India Pvt. Ltd - - 1,278 1,755 1,052 Yeti - - 1,278 1,755 1,052

Tata Motors 41,681 35,526 43,682 48,284 44,439 Aria - - 1,421 3,890 838 Safari 14,762 10,482 16,170 16,066 13,001 Sumo 24,465 23,049 24,002 27,819 30,600 Winger 2,454 1,995 2,089 421 -Xenon - - - 88 -

Toyota Kirloskar Motor Ltd. 38,310 53,703 64,863 69,234 93,504 Fortuner - 6,280 11,996 11,538 16,279 Innova 38,201 47,294 52,588 57,543 77,062 LC200 - 66 43 44 94 Prado 109 63 236 109 69

Volkswagen 12 91 3 6 88 Touareg 12 91 3 6 88


Company Model 2008-09 2009-10 2010-11 2011-12 2012-13 41 56 133 96 119

Volvo Car India XC60 82 57 84 XC90 41 56 51 39 35

Total (excluding MPVs) 214,592 262,842 313,851 361,571 551,602 Maruti Suzuki India Ltd 76,508 101,274 160,626 144,061 110,517

Eeco 8,601 68,329 59,537 40,563 Omni 76,508 92,673 92,297 84,524 69,954

Tata Motors Ltd 28,659 49,012 51,755 64,909 95,333 Venture - - 704 7,969 2,981 Ace Magic/Iris 28,659 49,012 51,051 56,940 92,352

Mahindra & Mahindra Ltd. - - 956 25,644 31,437 Maxximo Minivan VX - - 956 748 9,124 Gio and Maximo - - - 24,896 22,313

Force Motors Ltd. - - 237 147 12 Trip - - 237 147 12

Total (including MPVs) 319,759 413,128 527,425 596,332 788,901Notes: 1) Sales numbers of Audi, BMW, Mercedes from September 2011 are not available2) Segment totals and YTD nos may not match corresponding SIAM figures due to non availability of sales of certain models and re-statement of data by SIAM3) Data for Mahindra and Mahindra excludes sales of Jeep & Marshall Commanderna: Not Available


Cars-modelwise-sales

Cars: Model-wise domestic sales (Industry)

(nos) Model Segment 2008-09 2009-10 2010-11 2011-12 2012-13Audi India Ltd 826 1,350 1,999 2,047 -

A4 Executive 437 700 1,173 1,278 n.a A6 Premium 328 590 755 486 n.a A7 Premium - - - 52 n.a A8 Luxury 40 39 45 201 n.a R8 Coupe 6 9 17 13 n.a RS5 Coupe - - - 17 n.a TT Coupe 15 12 9 - n.a

BMW India Pvt. Ltd 2,742 3,459 6,094 2,863 -3 Series Executive 1,075 1,517 2,381 1,084 n.a 5 Series Premium 1,352 1,477 2,901 1,549 n.a 6 Series Coupe 36 19 14 10 n.a 7 Series Luxury 279 389 556 175 n.a GT Coupe - 11 165 24 n.a Z4 Coupe - 46 77 21 n.a

Fiat India Automobiles Pvt Ltd 8,067 24,609 21,067 16,073 6,920

500 Compact 31 23 1 - -Fiat Palio Compact 3,527 342 183 36 2 Grande Punto Compact - 13,116 11,896 11,696 5,425 Linea Executive 4,509 11,128 8,987 4,341 1,493

Ford India Ltd 25,196 34,325 95,395 90,506 75,771 Fiesta Mid-Size 15,350 16,254 13,812 20,454 14,807 Figo Compact - 7,316 78,116 70,052 60,964 Fusion Mid-Size 2,141 517 - - -Ikon Mid-Size 7,705 10,238 3,467 - -Mondeo Executive - - - - -

(nos) Model Segment 2008-09 2009-10 2010-11 2011-12 2012-13General Motors India Ltd Aveo Mid-Size 3,010 3,796 3,586 1,325 323

Aveo - UVA Compact 7,299 6,151 3,432 832 458 Beat Compact - 12,614 34,028 50,764 44,169 Cruze Executive - 4,072 9,040 8,037 3,994 Optra Executive 3,204 1,749 2,465 2,706 65 Sail Compact - - - - 10,422 Spark Mini 32,528 42,295 34,602 23,183 7,789

Hindustan Motors Ltd 6,562 8,950 7,223 3,069 3,510 Ambassador Mid-Size 4,992 8,210 6,516 2,626 3,405 Evo X Executive - - - 9 -Lancer Mid-Size 1,570 740 707 434 105

Honda SIEL Cars India Ltd 50,180 61,332 58,951 54,108 73,202 Accord Premium 4,105 2,775 2,446 1,271 617 Brio Compact - - - 10,489 32,179 Civic Executive 7,852 5,985 5,012 2,296 685 Honda City Mid-Size 38,223 45,030 46,631 35,906 30,550 Jazz Compact - 7,542 4,862 4,146 6,619 Amaze Compact - - - - 2,552

Hyundai Motors India Ltd 244,031 314,967 358,893 387,168 382,851 Accent Super Compact 12,234 12,463 15,404 8,839 2,931 Elantra Executive 19 - 2 - 4,556 EON Mini - - - 57,468 88,836 Getz Compact 9,436 6,467 62 - -i10 Compact 106,095 149,242 161,860 123,681 92,897 i20 Compact 4,993 42,128 78,645 77,456 91,400 Santro Mini 91,478 86,272 82,971 69,969 43,829 Sonata Premium 431 440 254 198 339 Verna Mid-Size 19,345 17,955 19,695 49,557 58,063


(nos) Model Segment 2008-09 2009-10 2010-11 2011-12 2012-13

Maruti Suzuki India Ltd Alto Mini 212,568 235,212 346,840 308,288 266,785 A-Star Mini 21,295 32,186 36,894 13,374 9,257 Baleno Mid-Size - - - - -Dzire Super Compact 61,952 83,601 107,955 110,132 169,571 Esteem Super Compact - - - - -Estilo Compact 32,694 41,624 52,188 17,458 11,279 Kizashi Executive - - 128 458 188 M800 Mini 49,383 33,028 26,485 23,253 17,833 Ritz Compact - 63,096 68,749 64,767 59,126 Swift Compact 110,071 116,174 140,862 153,529 184,897 SX4 Mid-Size 13,976 15,714 23,327 17,997 6,707 Wagon R Mini 134,768 144,898 163,019 146,474 135,694 Zen Mini - - - - -

Mercedes-Benz India Pvt Ltd 3,137 3,611 5,962 3,069 -C Class Executive 1,504 1,653 2,495 1,473 n.a CLS Coupe 16 5 35 5 n.a E 250 Premium 1,119 1,433 2,628 1,351 n.a E Class Cabrio Coupe - - 22 23 n.a E Class coupe Coupe - 9 32 2 n.a Maybach Exotics 1 - - - n.a S Class Luxury 472 495 704 195 n.a SL Roadster Coupe 1 - 2 - n.a SLK Roadster Coupe 24 16 37 15 n.a SLS AMG Coupe - - 7 5 n.a


(nos) Model Segment 2008-09 2009-10 2010-11 2011-12 2012-13

Mahindra & Mahindra Pvt Ltd Verito Super Compact 13,422 5,332 10,008 17,895 15,348

Nissan Motor India Pvt Ltd 73 207 12,564 33,015 35,510 370Z Coupe - - 10 6 -Micra Compact - - 12,315 18,674 11,448 Sunny Mid-Size - - - 14,164 23,997 Teana Premium 73 207 239 171 65

Precision Cars India Private Ltd.3 24 31 53 28 -911 Coupe 9 11 13 2 n.a Boxster Coupe 2 3 8 10 n.a Cayman Coupe 13 9 10 9 n.a Panamera Exotics - 8 22 7 n.a

Renault - - - 3,597 12,887 Fluence Executive - - - 1,604 1,669 Pulse Compact - - - 1,993 5,588 Scala Mid-Size - - - - 5,630

Skoda Auto India Pvt Ltd 13,894 17,542 21,693 32,334 28,656 Fabia Compact 5,798 6,541 11,078 14,936 3,509 Laura Executive 7,382 7,831 6,598 5,466 2,850 Rapid Mid-Size - - - 8,852 20,274 Superb Premium 714 3,170 4,017 3,080 2,023

Tata Motors Ltd 160,422 201,399 256,202 257,966 174,692 Indica Compact 111,253 114,415 97,845 105,706 77,945 Indigo Compact 49,169 56,634 87,925 77,733 42,899 Nano Micro - 30,350 70,432 74,527 53,848


(nos) Model Segment 2008-09 2009-10 2010-11 2011-12 2012-13Toyota Kirloskar Motor Ltd 8,581 10,134 19,226 90,969 72,000 Toyota Kirloskar Motor Ltd 8,581 10,134 19,226 90,969 72,000

Camry Premium 513 367 298 140 389 Corolla Executive 8,068 9,743 10,708 8,904 5,348 Etios Super Compact - - 8,101 50,157 38,655 Liva Compact - - - 31,761 27,596 Prius Premium - 24 119 7 12

Volkswagen India Pvt Ltd 2,212 3,988 51,605 78,275 62,459 Beetle Super Compact - 179 398 59 1 Jetta Executive 1,639 2,443 3,221 3,106 2,898 Passat Premium 573 668 660 1,564 1,170 Phaeton Luxury - - 42 14 1 Polo Compact - 698 28,904 39,465 34,678 Vento Mid-Size - - 18,380 34,067 23,711

Volvo Car India 25 60 56 112 155 S60 Executive - - 23 96 99 S80 Premium 25 60 33 16 56

Total 1,222,142 1,527,506 1,980,591 2,015,671 1,872,518 Notes:1) Sales numbers of Audi, BMW, Mercedes from September 2011 onwards are not available2) Since SIAM have stopped reporting Audi, BMW and Mercedes sales figures thus the segmental figures may have discrepancies between SIAM and model-wise figures. In addition to this, SIAM doesn’t report Volvo Car figures which would further add to this.3) Yearly figures may not match Yearly figures as reported by SIAMna: Not Available


Passenger car_annual

Cars : Playerwise Production

Player 2008-09 2009-10 2010-11 2011-12 2012-13Audi 0 0 0 0 0BMW India Pvt. Ltd. 2426 2765 1872 9620 4690Daimlerchrysler India Ltd. 3065 3369 2564 6895 2793Fiat India Ltd. 9079 26647 21896 17351 7941Ford India Ltd. 24001 36567 109468 117345 108123General Motors India Ltd. 44799 66034 91032 86830 68120Hindustan Motors 7040 9063 7185 2941 3468Honda SIEL Cars India Ltd. 46865 65735 60484 49459 73936Hyundai Motors India Ltd. 502218 589536 594601 629258 638281Mahindra & Mahindra Ltd. 14404 6225 11702 17849 15694Maruti Suzuki India Ltd. 691335 920225 1105037 981245 978301Nissan Motor India Pvt. Ltd. 0 0 74512 128936 136654Renault 0 0 0 4464 14249Skoda Auto India Pvt. Ltd 15164 10315 17539 34625 29659Tata Motors 148103 164187 278387 278368 183513Toyota Kirloskar Motor Ltd. 8196 9797 19277 91750 93850Volkswagen 0 0 47264 79565 66707Tata-JLR 0 0 200 107Volkswagen-Porsche 0 0 0Grand Total 1516695 1910465 2442820 2536701 2426086Note:1) Numbers for Audi, BMW and Mercedes are available only from April to September forthe years 2010-11 and 2011-12 2) Totals will not match SIAM numbers on account of restatement of data by SIAM

Alternative fuels

Rising prices of conventional fuel to boost demand for alternate fuel vehicles

• Average prices of conventional fuel, mainly petrol, have increased by

around 25 per cent cent in the last two years.

• This sharp increase has prompted consumers to consider vehicles

running on alternate fuels like compressed natural gas (CNG) and

liquefied petroleum gas (LPG).

• These alternatives not only reduce the average running cost of the car,

but also emit lower greenhouse gases as compared to conventional fuels

such as petrol and diesel.

• The proportion of vehicles equipped with CNG/LPG fuel options are

estimated to have increased to about 8 per cent in 2012-13, from less than

1 per cent in 2006-07.

• The penetration of such vehicles, however, continues to remain low

mainly because of the poor distribution infrastructure available in India.

• CNG is considered to be the most environment friendly fuel

amongst all hydrocarbons as it emits the lowest amount of toxic

gases.

• It is also priced at less than half that of petrol.

• The basic engine characteristics of vehicles are retained while

converting it to run on CNG.

• The vehicle is therefore capable of running either on petrol or CNG

at the flick of a switch.

• However, the major disadvantage of CNG vehicles is the loss of

luggage space.

• CNG cylinders take up a lot of storage space and generally have to

be placed in the boot of the car.


• The body of the cylinders too has to be made of good grade steel

capable of enabling better life with higher wear and tear on

account of usage.

• The cost of conversion too is another major determinant.

• The conversion kit can cost from Rs 35,000 to Rs 50,000 but the

cost can be recovered from the fuel savings.

• LPG is natural hydrocarbon fuel made up of propane and

butane, and is a by-product of the oil and gas industries.

• The burning of LPG produces less carbon dioxide than

conventional fuels and is therefore less polluting.


• Spiraling crude prices in the recent years are encouraging

automakers to come up with CNG/LPG variants of their major

selling models, as shown in the following table:


CNG and LPG variants

Comparing cost across fuel options

Comparing cost across fuel options

• As evident from the above table, the running cost of a CNG

car is the lowest and that of the petrol car is the highest, at

current prices.

• Although the running cost of CNG and LPG-run vehicles is

lower, their availability is a concern due to the lack of

adequate distribution outlets in the country.

• There are only about 900 CNG filling stations and auto LPG

dispensing stations (ALDS) each spread across country.

Demand and supply situations of various fuels

• India has a surplus refining capacity in both petrol and diesel,

although it is dependent on imports for crude oil.

• India's oil marketing companies have also built up an extensive

fuel network for both petrol and diesel but as observed from the

graph below, aggregate availability of LPG is a concern.

• In the case of CNG, both availability and distribution are

matters of concern.

LPG production and consumption

Motor Spirit production and consumption

High Speed Diesel production and consumption

Evolving technologies

Evolving technologies

• Modern technology, in the form of hybrid technology, fuel cell

technology, electric vehicles etc has emerged in recent times.

• Solar energy, methanol and hydrogen gas are also being

experimented as alternate fuels.

Hybrid technology

• Hybrid vehicles run on at least two sources of power.

• While an electric motor provides one source of power, a

different technology could be used to derive the other source.

• An internal combustion engine, designed to run either on

petrol or diesel, typically provides the technology to procure

power.

Hybrid technology

• The term, diesel-electric hybrid, refers to a Hybrid Electric Vehicle

(HEV), that combines the power of a diesel engine with an electric

motor.

• The hybrid car typically gives 1.5-2.0 times greater fuel-efficiency and

lower emission than the conventional petrol engine.

Key features of gasoline hybrid vehicle are as follows:

• Engine: The petrol engine is smaller compared to the normal version,

but offers better technology to increase fuel efficiency

and reduce emission.

• Fuel tank: The fuel tank is a device to store petrol used for running

the engine.

Key features of gasoline hybrid vehicle are as follows:

•Electric motor: The electric motor is very sophisticated.

Advanced electronics are used, which allow it to double up as a

motor and a generator. For example, whenever needed, it can

draw energy from the batteries to accelerate the car.

Simultaneously, it can act as a generator, slow down the car and

restore energy to batteries.

•Generator : The generator is similar to an electric motor, but acts

only to produce electrical power.

•Batteries : The batteries store energy needed to run the electric

motor. The electric motor on a hybrid car charges batteries with

energy and also draws energy from them.

Hybrid technology

Hybrid conceptsThe hybrid engine runs on two concepts viz. parallel hybrid and series hybrids:

• Parallel hybrids : In a parallel hybrid concept, both the engines

(electric and gasoline) can provide power to turn on the

transmission, and the transmission powers the wheels.

• Honda Insight and Toyota Prius are vehicles that run on this

concept.

• Series hybrids : In a series hybrid concept, the petrol engine turns

the generator on, and the generator can either charge the batteries

or power the electric motor that drives the transmission.

• Thus, the petrol engine or the electric motors can never directly

power the vehicle.

Hybrid concepts

The hybrid engine runs on two concepts viz. parallel hybrid and series hybrids:

• Globally, major players like Honda, BMW, Toyota, Kia, Range Rover, etc

are present in the hybrid vehicles segment.

• Honda was the first automaker to launch a hybrid car - Civic, through its

Indian subsidiary, Honda Siel Cars India Ltd in June 2008.

• However, due to weak customer response, the company discontinued

this car in April 2009.

• Currently, the hybrid variant is available through imports as completely

built units (CBU).

• In 2010, Toyota Kirloskar Motors also launched a hybrid car, Prius from

its global portfolio in India.

• In 2012-13, the company was able to sell around 12 units of this model.

• Toyota is also planning to offer a hybrid variant in its Etios model.

• Mahindra & Mahindra (M&M) offers a micro hybrid technology,

which was developed along with auto parts maker Bosch Ltd, the

Indian arm of Germany's Bosch group.

• M&M introduced this technology in its utility vehicles Scorpio,

Bolero and its latest XUV 500 , which has redefined technological

benchmarks.

• M&M has sold 40,000-50,000 vehicles, since the technology was

first introduced in Scorpio in 2008.

• (Micro hybrid technology automatically shuts down and restarts

the internal combustion engine to reduce the amount of time the

engine spends idling, thereby reducing fuel consumption and

emissions.

Hybrid conceptsThe hybrid engine runs on two concepts viz. parallel hybrid and series hybrids:

• It shuts off the engine when a car is in its neutral gear and the

clutch is not depressed for 10-15 seconds.)

• M&M is also planning to launch a complete hybrid vehicle

over the next three years.

• Tata Motors Ltd too is working on a hybrid model.

• The company had also showcased a diesel and electric hybrid

version of its Indigo Manza sedan at the Auto expo in January

2012.

Hybrid concepts

The hybrid engine runs on two concepts viz. parallel hybrid and series hybrids:

Electric technology

• Electricity can be used to power batteries and fuel cell vehicles.

• Electric vehicles (EVs) use the electricity stored in a battery as fuel.

• The electric motor converts electricity, usually from a battery pack

into mechanical power to turn the wheels.

• However, EV batteries have limited storage capacity and must be

replenished regularly by plugging the vehicle into a recharging unit.

• Compared to petrol cars, electric cars have electric motors instead of

internal combustion engines.

• While internal combustion engines are powered by fuels, (diesel,

petrol etc), an electric engine receives power from a controller via

rechargeable batteries, which are powered by a common household

electric outlet.

• An electric motor relies primarily on electromagnets.

• By passing an electrical current through a wire loop, an electric

motor converts electrical energy into mechanical energy.

• This conversion takes place because the wire loop produces a

magnetic field, which then transfers energy to the shaft, turns the

loop and creates mechanical energy.

• This mechanical energy is then used to propel the vehicle forward.

Electric technology

Currently, there are three types of electric motors to choose from,

each with its own advantages and disadvantages.

1. DC brushless motor type provides top speeds, but has

slower acceleration.

Electric technology

Currently, there are three types of electric motors to choose from,

each with its own advantages and disadvantages.

2. AC induction motor enables a higher acceleration rate, though

its top speed is average. It also has the most expensive type of

motor.

3. Permanent magnet DC motor enables higher torque and also

provides better acceleration and speed as compared to DC

brushless and AC induction motors.

Electric cars are also available with three types of batteries:

1. Lead acid batteries: These are most cost-effective and

hence, very popular.

2. Nickel metal hydride batteries: Although costlier than lead

acid batteries, these perform better and require lesser space.

3. Lithium ion batteries: With the steepest price tag, these are

less common than other types of batteries. However, they also

provide superior performance and range.

Electric cars are also available with three types of batteries:

• Globally, there are several players manufacturing electric vehicles like

Nissan, General Motors (GM), Ford, Mitsubishi, Toyota,Honda etc.

• Although few players like Tata Motors and General Motors India had

showcased electric variants of their small cars at the various auto expo

shows in India, they have no plans to launch it over the short to

medium term.

• In India, M&M is the only player manufacturing four-wheeler

EVs.

• Currently, M&M has one model REVAi and it is expected to

launch an upgraded variant – REVA NXR over the next 1-2

years.

• In January 2013, Maruti announced plans to manufacture its first

hybrid vehicle Swift Range Extender.

• Maruti has already started road-testing this vehicle, which runs

on an electric motor, and alternatively on petrol.

• This model was developed by its parent, Suzuki Motor

Corporation and was unveiled at the Tokyo motor show in

November 2012.

Electric technology

Other evolving technologies

• Other technologies such as fuel cell technology, cars based on

compressed air technology, solar energy, methanol and hydrogen

gas technology are also being used globally.

• However, these technologies are still nascent in India.

• Fuel cell technology: Fuel cell vehicles use a completely

different propulsion system from conventional vehicles, which

can be 2-3 times more efficient.

• Unlike conventional vehicles, they produce no harmful exhaust

emissions.

• Fuel cell vehicles can be fueled with pure hydrogen gas stored

directly in the vehicle or extracted from a secondary fuel, such

as methanol, ethanol, or natural gas that carries hydrogen.

• Fuel cell technology: These secondary fuels must first be converted into

hydrogen gas by an onboard device called a reformer.

• This technology uses an electrochemical process to create energy using a

conversion device that converts chemicals like hydrogen and oxygen into

water and produces electricity in the process.

• Fuel cell vehicles fueled with pure hydrogen emit no pollutants; they emit

only water and heat.

• Vehicles that use secondary fuels and a reformer produce only small

amounts of air pollutants.

• In order to increase efficiency, fuel cell vehicles can be equipped with other

advanced technologies such as regenerative braking systems that capture

the energy lost during braking and store it in a large battery.

• These vehicles are still at early stages of development. Research and

development efforts are bringing them closer to commercialisation.


• Compressed Air technology : The engine that is installed in a

'compressed air car' uses compressed air that is stored in the car's

tank at a pressure as high as 4,500 psi (pressure per square inch).

• The technology used by air car engines is totally different from

that used in conventional fuel cars.

• They use the pressure generated by the expansion of compressed

air to run their pistons.

• This technology is non-polluting, as air is the only product that is

used by the engine to produce power and the waste material is

the air itself.

• Under this technology, ambient air is compressed in the vehicle's

tank.


• Compressed Air technology : The air coming from the high pressure

tank crosses a pressure reducer.

• It is then used in a system of expansion with work, consisting of an

active chamber and an expansion cylinder.

• This new thermodynamic cycle consists of the following three steps:

1. The feeding of the charge cylinder (or the active chamber) at constant

pressure. This stage is performed at constant pressure and

temperature, It produces significant work on the crankshaft and

makes it possible to double the efficiency of a conventional expansion.

2. Expansion of the volume of air created by the active chamber in the

expansion cylinder.

3. Venting of exhaust


• The energy released through this cycle is transferred to the wheels

through the gear box.

• At present, this technology is used mainly by a Luxemburg-based

company Motor Development International (MDI).

• Tata Motors has also announced plans to launch such a car in

association with MDI.

• Methanol: Methanol, also known as wood alcohol, has been used

as an alternative fuel in flexible fuel vehicles that run on M85 (a

blend of 85 per cent methanol and 15 per cent petrol).

• However, it is not commonly used at present because auto

manufacturers are no longer producing methanol-powered

vehicles.

• In the future, methanol could be used for providing the hydrogen

necessary to power fuel cell vehicles.


• Hydrogen: Hydrogen gas is expected to play an important role in

developing sustainable transportation, because it can be produced in

virtually unlimited quantities using renewable resources.

• Pure hydrogen and hydrogen mixed with natural gas (hythane) have been

used effectively to power automobiles.

• Hydrogen is the cleanest of all alternative fuels, as it burns with nearly zero

emissions in an internal combustion engine and emits only water vapor and

heat in an electro-mechanical fuel cell.

• Hydrogen vehicles are being developed in many forms by several large car

manufacturers.

• Some vehicles powered by hydrogen are in demonstration fleets, while

others like the Honda FCX Clarity and Chevy Equinox Fuel Cell are being

driven by consumers.


• Solar energy : Solar energy technologies use sunlight to produce heat

and electricity.

• Electricity produced by solar energy through photovoltaic technologies

can be used in electric vehicles.

• The market for pure solar powered vehicles is limited (used for

competition and demonstration) and none of the vehicle manufacturers

are planning to manufacture these vehicles on a commercial scale.

• Cornstarch : Tata Motor's research and development (R&D)

department is working on integrating cornstarch, the non-flammable

and non-toxic material, in making body parts of the vehicle, to improve

safety aspects.

• Tata Motors claimed that cornstarch can increase the crash resistance of

cars and reduce the effects of an accident on occupants.


Key global markets-overall

Global car sales growth remained weak in 2011

• The global cars industry grew marginally by 3.3 per cent (y-o-y) to about

47.8 million units in 2011.

• Three regions - Asia, Western Europe and North America - together

contributed above 80 per cent of total car sales, globally.

• This was 1.5 per cent lower than 2010 levels, mainly due to weak

performance of the Western European market.

• In 2010, the global cars industry grew by 10.1 per cent (y-o-y) to about 48.6

million units with Asia (contributing nearly 40 per cent to the global car

industry) posting a sharp growth of 21.8 per cent (y-o-y).

• Western Europe (contributing 29 per cent to the global car market),

however, declined by 0.5 per cent (y-o-y) on account of weak economic

growth.

• Africa rose the sharpest by 23 per cent (y-o-y), followed by Eastern

Europe at 18.8 per cent (y-o-y), South America at 14.6 per cent (y-o-

y), Oceania at 9.3 per cent (y-o-y) and North America at 4 per cent

(y-o-y).

Global car sales growth remained weak in 2011

Cars - Region-wise global sales

Note: Data for 2012 is not available.

• During 2011, passenger car sales in Eastern Europe posted sharp growth of

25.4 per cent (y-o-y), followed by South America and North America, where

sales rose by 8.1 per cent and 7.7 per cent (y-o-y), Sales in North America

rebounded strongly over a low base, however, remained below pre-crisis

levels.

• Sales in Africa, which grew at a phenomenal pace of 21.8 per cent (y-o-y) in

2010 over a low base of 2009, declined marginally by 1.7 per cent in (y-o-y)

in 2011.

• Car sales in Oceania also declined by 5.2 per cent (y-o-y).

• Growth in the passenger car market in Asia remained muted in 2011, since

growth in China (6.7 per cent) and that in India (5.5 per cent), was offset by

a sharp decline of 16.3 per cent in Japan.

• Car sales in Western Europe too continued to decline due to a weak macro-

economic environment.

Cars - Region-wise global sales

Cars - Region-wise growth (y-o-y)


• Analysis of key markets in Europe and North America, based on

data released for 2012, reveals that the North American markets

have continued to show a strong rebound in volumes.

• However, volumes still remain below pre-crisis levels.

• The Japanese passenger car market witnessed a strong revival in

2012 over a Tsunami-led downturn in 2011, and witnessed robust

growth in volumes.

Cars - Region-wise growth (y-o-y)

Key global markets_US

US passenger car sales reached five-year high in 2012

• After the global financial turmoil in 2008, passenger car sales in

the US started recovering consistently, albeit at a slower pace.

• Passenger car sales recorded a five-year high and grew by 16.9

per cent (y-o-y) in 2012.

• Car volumes stood at 7.2 million units, but have yet not crossed

pre-crisis levels.

• Rising demand for mid-sized and small cars was the key growth

driver.

• However, over a five year period (2007 to 2012), passenger car

sales in the US declined by 0.9 per cent.

Trend in US passenger car sales

Market share of key players


• In 2011, the three leading players in the US automobile market

viz., General Motors, Ford Motor and Chrysler LLC accounted

for around 45 per cent of overall sales. Market shares of Toyota

and Honda declined by 2 per cent from the 2010 level.

• Both suffered mainly on the back of production disruptions,

due to natural earthquakes in Japan and Thailand.

• Market shares of both Chrysler LLC and General Motors rose

marginally by 1 per cent.

• Market shares of Ford and Nissan remain unchanged in 2011

over the previous year.

Market share of key players

Western Europe car sales recorded all-time low in past 20 years .....

• Western Europe comprises all nations from the European

Union (EU) - 15 group and countries, which have signed the

European Free Trade Agreement (EFTA) viz, Iceland, Norway

and Switzerland.

• In 2012, new passenger car registrations in Western Europe

declined by 8.1 per cent (y-o-y) and recorded a 20-year low.

• The ongoing economic uncertainty surrounding European

nations have weakened buyer sentiments, leading to a sharp

contraction in car sales.

• Even during the first half of 2013, new passenger car

registrations in Western Europe declined by 6.6 per cent (y-o-y)

(from January to June 2013).

Car sales decline in 2012

Of the top 5 markets, only UK market managed to grow

Performance of key countries

• Germany, Italy, France, Spain and the UK together accounted

for about 78 per cent of the total Western European car market

in 2012.

• Among these, only UK managed to grow by 5.3 per cent (y-o-y).

• Sales in Spain fell by 19.9 per cent during the year, while sales in

France and Italy fell by 13.9 per cent and 13.4 per cent

respectively.

• During the first half of 2013 as well, car sales in the UK

expanded by 10 per cent (y-o-y), while all other markets

experienced a downturn.

• Sales in France, Italy, Germany and Spain dropped by 11.2 per

cent, 10.3 per cent, 8.1 per cent and 4.9 per cent respectively.



Share of small cars continued to growSegment-wise break-up of cars sales

Sales in the small and lower-medium segment together contributed to around 68.9 per cent to total car sales in 2012, compared to 70 per cent in 2011.

Share of diesel cars fell marginallyWestern Europe - Share of diesel cars

During 2012, diesel models accounted for 55.2 per cent of all the new cars sold. Diesel penetration was around 30 per cent (of the total car fleet) in the five main markets of Europe, viz, Germany, Italy, France, UK and Spain.

Volkswagen constitutes nearly one-fourth of the market

Manufacturer-wise break-up of car sales in 2012

In 2012, the Volkswagen Group and PSA Group remained top manufacturers and

together contributed 36.5 per cent to total passenger car sales. Renault Group and

General Motors contributed 8.2 per cent and 8 per cent, followed by Ford, BMW Group

and Daimler.

Key global markets-western europe

Western Europe car sales recorded all-time low in past 20 years .....

• Western Europe comprises all nations from the European Union

(EU) - 15 group and countries, which have signed the European Free

Trade Agreement (EFTA) viz, Iceland, Norway and Switzerland.

• In 2012, new passenger car registrations in Western Europe declined

by 8.1 per cent (y-o-y) and recorded a 20-year low.

• The ongoing economic uncertainty surrounding European nations

have weakened buyer sentiments, leading to a sharp contraction in

car sales.

• Even during the first half of 2013, new passenger car registrations in

Western Europe declined by 6.6 per cent (y-o-y) (from January to

June 2013).

Car sales decline in 2012



• Germany, Italy, France, Spain and the UK together accounted for

about 78 per cent of the total Western European car market in 2012.

• Among these, only UK managed to grow by 5.3 per cent (y-o-y).

• Sales in Spain fell by 19.9 per cent during the year, while sales in

France and Italy fell by 13.9 per cent and 13.4 per cent respectively

• During the first half of 2013 as well, car sales in the UK expanded by

10 per cent (y-o-y), while all other markets experienced a downturn.

• Sales in France, Italy, Germany and Spain dropped by 11.2 per cent,

10.3 per cent, 8.1 per cent and 4.9 per cent respectively.



Share of small cars continued to grow

Segment-wise break-up of cars sales

Sales in the small and lower-medium segment together contributed to around 68.9 per cent to total car sales in 2012, compared to 70 per cent in 2011.

Share of diesel cars fell marginally

Western Europe - Share of diesel cars

During 2012, diesel models accounted for 55.2 per cent of all the new cars sold. Diesel penetration was around 30 per cent (of the total car fleet) in the five main markets of Europe, viz, Germany, Italy, France, UK and Spain.

Volkswagen constitutes nearly one-fourth of the marketManufacturer-wise break-up of car sales in 2012

• In 2012, the Volkswagen Group and PSA Group remained top

manufacturers and together contributed 36.5 per cent to total

passenger car sales.

• Renault Group and General Motors contributed 8.2 per cent and 8

per cent, followed by Ford, BMW Group and Daimler.

Volkswagen constitutes nearly one-fourth of the marketManufacturer-wise break-up of car sales in 2012

Key global markets-china

Passenger vehicle sales growth in China remained moderate in 2012

• China is the world's largest producer of passenger vehicles (PVs),

surpassing the US in 2008 and Japan in 2009.

• As of 2012, PV sales contributes more than 80 per cent of China's

total automobile sales.

• The PV market in China has more than 100 indigenous

manufacturers assembling vehicles.

• Due to government restrictions, all foreign manufacturers

assemble vehicles in China under their brands through joint

ventures with Chinese state-owned enterprises.

Trend in foreign manufacturer's share in China's passenger vehicle market

China's PV sales grew by a modest 7 per cent y-o-y in 2012, which was slightly higher than the y-o-y growth rate of 5 per cent in 2011. Growth in 2012 was mainly driven by healthy y-o-y growth of sports utility vehicles (SUVs), followed by a growth of 5.7 per cent in sedans.

Segment-wise passenger car sales mix

• Post liberalisation of the Chinese economy in 2001, the PV market was

growing at a strong pace till the global economic downturn.

• However, following the financial turmoil in 2008, the PV market in China

was significantly impacted, and posted a mere 7 per cent y-o-y growth.

• In order to boost passenger car sales, the Chinese government introduced a

stimulus package in 2009:

1. The purchase tax on light passenger cars (displacement volume less than

1.6 liters) was reduced by 50 per cent;

2. One-time subsidy programme (RMB 5 billion) was implemented for rural

residents on the purchase of light vehicles or mini passenger cars

(displacement volume below 1.3 litres);

3. An additional auto trade-in subsidy programme was announced to

accelerate the replacement of outdated vehicles with high emissions.



• These stimulus policies were implemented in the rural as well as

urban areas, which benefited first-time buyers along with existing

buyers.

• As a result, PV sales rose by a robust 53 per cent and 33 per cent y-

o-y in 2009 and 2010, respectively.

• However, two years of strong PV sales led to a traffic congestion

and increased concerns of air pollution in large and medium-sized

cities in China.

• Hence, in late 2010, the government phased out subsidies, rebates

and a sales tax break on vehicle purchases.

• To prevent overheating and tackle rising inflation, the government

also tighten credit policies and put restrictions on new licences in

2011.

• The removal of incentives forced consumers to turn away from

local brands, following which the proportion of domestic brands

in total PV sales declined in 2011.

• PV sales growth decelerated to 5 per cent in 2011 and remained

moderate in 2012.


Trend in China's passenger vehicle sales

For the first nine months of 2013, PV sales in China rose marginally y-o-y to 12.8 million, mainly due to high sales growth of utility vehicles with the revival in demand from Japanese branded passenger cars.

Launch of Honda Amaze

Honda launched Amaze in India

• Honda launched its new sub-4 metre car Amaze in the Indian

market.

• The car is Honda's first car in India to sport a diesel engine.

• With the launch of its new car, the company has discontinued

its existing premium hatchback Jazz and is expected to launch

the new Jazz in 2014-15.

• Honda's new i-DTEC light weight diesel engine with a claimed

mileage of 25.8 kpl which makes it the countrys most fuel

efficient car.

• In terms of claimed mileage, the car exceeds Maruti Swift Dzire

and Toyota Etios which claim a mileage of close to 23.5 kpl.

Technical specifications

• On the technical front, Honda Amaze compares well to most

other cars in the segment and especially so with respect to

mileage and torque (diesel model).

• The boot space is considerable when compared to the small

version of Swift Dzire helping it compete effectively.

• However, as per several published reviews, the diesel engine

is a bit noisy.

• The interiors are similar to Brio and hence may not find favour

with some buyers.


Competition to increase owing to aggressive pricing by Honda

Price comparison across models

• Amaze scores well on the pricing front. In terms of pricing, Honda

Amaze competes aggressively with the segment incumbent (Swift

Dzire) with the base petrol variant priced at Rs. 5.1 lakhs ex-

showroom Mumbai (same as Swift Dzire) and diesel variant priced

marginally lower than Swift Dzire at Rs. 6.1 lakhs.

• Additionally, the base petrol variant provides features such as

front and rear power windows and central locking which are amiss

in base variant of Swift Dzire.

• The base diesel variant of Honda Amaze also scores over that of

Swift Dzire despite lower pricing as it provides central locking and

ABS not available in the latter.



• However, we believe availability of another lower priced model

in the segment will pose a formidable competition to Toyota

Etios and M&M Verito in addition to challenging Swift Dzire.



Our view

• Though Amaze is a perfect competitor to Swift Dzire, we

expect it to eat into the share of Toyota Etios and M&M Verito.

• Demand for Swift Dzire too will be impacted, however, to a

lesser extent due to 's superior brand Maruti positioning and

reach.

• Given weak demand for Honda's petrol cars, City and Brio, we

expect that company is not likely to face significant bottlenecks

in terms of capacity in the near term.

• However, with an expectation of decline in petrol prices, we

expect waiting period to prevail in the short term, should sales

of its petrol fleet recover in line with an expected recovery in

sales of petrol cars.

• Honda's current installed capacity in India is currently 120,000

units.

• We expect that with the current line-up of models, the

company would target sales of 3,000-3,500 units per month.

Our view

Dealer Interactions:

• The company has reported wholesale sales of over 2,000 units

during March.

• On an average, dealers are getting about 20 enquiries per day.

• A few of them have also reported pre bookings ranging from 70-

100 from April 01, 2013 and are expecting a waiting period

of 15-20 days post launch.

• So far, the company is estimated to have received bookings for

over 6,500 units.

Super compact segment recorded a growth of 21 per cent in 2012-13

• The super compact segment (as per SIAM's classification)

includes cars with seats upto-5, length normally between 4000 –

4250 mm, body style-sedan/estate/hatch/notchback, engine

displacement normally upto 1.6 litre.

• Sales in this segment form nearly 12 per cent of total sales and

they grew by a whopping 21 per cent in 2012-13 despite car

sales growth ending the year in red.

Swift Dizre constitutes three-fourths of the segment sales

• Excise duty on sedans in India is upwards of 24.7 per cent

depending upon its size and engine capacity.

• However, cars with length not exceeding 4,000 mm and engine

capacity not exceeding 1,200 cc for petrol and 1,500 cc for diesel

enjoy concessional duty of 12.4 per cent.

• For availing of the excise duty benefit, Maruti Suzuki had

launched a sub-4m version of its existing model Swift Dzire in

2012.

• As Honda Amaze too falls under this category, it enjoys a

concessional excise duty of 12.4 per cent enabling it to gain a

price advantage over most other models in the segment.


• Maruti Suzuki Swift is the largest selling car in this segment

clocking 13,000-15,000 units on an average with Etios being in

the second spot with sales of 3,000-4,000 units per month.

• Both Mahindra and Mahindra's (M&M) Verito and Hyundai

Motors India Limited's (HMIL) Accent command a very low

share (nearly 7 per cent and 1 per cent) in segment's total sales.


About Honda

• Honda Cars India Limited, a subsidiary of Honda Motor Co

Limited, Japan; first set up shop in India in 1995.

• The companys product range include Honda Brio, Honda Jazz,

Honda City, Honda Civic, Honda All-New CR-V and Honda

Accord which are produced at the Greater Noida facility.

• The Noida facility was set up in 1997 and has a capacity of 1.2

lakh units spread over 150 acres.

• The companys second manufacturing facility is in Tapukara,

Rajasthan.

• This facility is spread over 450 acres and currently has a Power

train and Press shop.

• The first phase of this facility was inaugurated in September

2008.

• The company recently announced an investment of Rs 25 billion at

its Rajasthan plant to build a new assembly line of 1.2 lakh units, a

new diesel engine component forging line and a Forging plant.

• The company registered an annual growth of 35 per cent by selling

an all time high volume of 73,483 units during Apr 2012 – Mar 2013

as compared to 54,427 units in the corresponding period last year.

• The company also exported a total volume of 2,622 units during the

fiscal year 2012-13.

• The company registered these volumes through a sales and

distribution network of 150 facilities spread across 97 cities.

• The network stood at 135 facilities in 83 cities in 2011-12. Honda

commands a market share 2.8 per cent in total passenger vehicle

sales.

About Honda

Launch of Ford Ecosport

Ford EcoSport to make a mark in UV segment

• Ford India launched its new sub-4 metre compact utility vehicle,

the Ford EcoSport, on June 27, 2013.

• The company has invested $142 million (~Rs 8 billion) in its

Chennai facility to support production of the EcoSport.

Ecoboost technology makes India debut

• The EcoSport has been launched with three engine options a 1-litre

petrol engine with eco-boost technology (manual transmission), another

1.5-litre petrol model (manual and automatic transmission) and a 1.5-

litre diesel engine (manual transmission).

• The turbo-charged direct injection 1-litre petrol engine with Ecoboost

technology has a three-cylinder 1,000 cc displacement.

• It is expected to match the performance of a 1.6-litre engine with 120

bhp and 170 Nm of torque.

• In India, the EcoSport is manufactured locally to the extent of ~65 per cent

while the Ecoboost engine is imported from Romania.

• The company expects to achieve a localisation of 80 per cent over the next

few years.

Ecoboost technology makes India debut

EcoSport well placed to compete with existing models

• Ford EcoSport compares well with most other compact utility vehicles on

the technical front (Please refer to the annexure for technical details).

• Urbane in look and feel, the car is expected to compete with Renault's

Duster along with other technical details) similarly priced utility vehicles

i.e. Maruti's Ertiga and M&M's Quanto.

• The 1-litre EcoBoost petrol engine could prove to be a game changer for

Ford in India.

• In Brazil, the EcoSport has been providing tough competition to Renault's

Duster by outselling it month over month since its launch in 2012.

• EcoSport's variants with 1-litre petrol engine and 1.5 litre diesel engine are

expected to be eligible for concessional excise duty of 12 per cent owing to

their length and engine capacity.

• In India, the excise duty on sedans is generally upwards of 24 per cent.

• However, cars and utility vehicles with length not exceeding 4,000 mm and

engine capacity not exceeding 1,200 cc for petrol and 1,500 cc for diesel,

enjoy a concessional duty of 12 per cent.

• This will give EcoSport a competitive advantage in terms of pricing over

most other models in the segment.

• EcoSport has been priced attractively in the range of Rs 5.6-7.6 lakh for the

1.5-litre petrol model and Rs 8-8.4 lakh for the 1.0 litre diesel model.

• Thus, the company is well-placed to take on competition from peers on

account of attractive pricing and strong technical specifications.

• The diesel model has been priced at Rs.7-9.4 lakhs.

EcoSport well placed to compete with existing models

EcoSport domestic sales volumes expected to be similar to those of Duster

Note: 1) The size of the bubble and numbers indicated along with model names represent average units sold per month in 2012-132) For Ford EcoSport, the size of the bubble and the numbers indicated along with the model name represent average units projected to be sold per m3) Prices are ex-showroom Mumbai and represent prices of base/cheapest variant

• CRISIL Research expects EcoSport to provide strong competition

to other players in the sub-15 lakh UV segment as well as

similarly priced sedans.

• Renault's Duster, which currently sells 4,000-5,000 units each

month, could be the most impacted.

• The Ecoboost petrol engine and competitive pricing would be its

unique selling proposition, especially as the difference between

petrol and diesel has been narrowing.

• While demand would be strong, we expect sales of the EcoSport

to be limited to 4,000-5,000 units per month in 2013-14,

considering Fords production capacity.

• This would lead to longer waiting periods for the model.


• Currently, Ford has an installed capacity of 200,000 units on a

three-shift basis at its Chennai plant, which runs at a capacity

utilisation of over 80 per cent (assuming the plant operates on a

two-shift basis).

• If the company continues to work on two shifts and we consider

minimal growth in production of other vehicles, Ford will be able

to produce about 2,000 units of Ford EcoSport per month.

• Sales of EcoSport are expected to be higher as weak domestic

demand will limit growth in the sales of its existing models.

• Moreover, Ford also has the option to operate on a three-shift basis.

• Hence, we believe, that the company will be able to target

production of 4,000 - 5,000 units of EcoSport per month in 2013-14.


New UV launches drove growth in 2012-13

New models constituted 70 per cent of incremental sales in 2012-13

• UV sales grew at a phenomenal pace of 52 per cent even as car

sales declined by 7 per cent y-o-y in 2012-13.

• During the year, the share of UVs in total domestic passenger

vehicle sales increased to 21 per cent from 10 per cent in 2010-11.

• This growth can be attributed to the host of new model launches

(which garnered significant consumer interest) and ample

availability of diesel models.

• Sales of new models like the Duster, Ertiga and Quanto

constituted about 17 per cent of domestic UV sales and 70 per

cent of incremental domestic UV sales during 2012-13.

• UV sales grew at a phenomenal pace of 52 per cent even as car

sales declined by 7 per cent y-o-y in 2012-13.



• During the year, the share of UVs in total domestic passenger

vehicle sales increased to 21 per cent from 10 per cent in 2010-11.

• This growth can be attributed to the host of new model launches

(which garnered significant consumer interest) and ample

availability of diesel models.

• Sales of new models like the Duster, Ertiga and Quanto

constituted about 17 per cent of domestic UV sales and 70 per

cent of incremental domestic UV sales during 2012-13.



Growth in sedan segment moderates as consumers turn to UVs

Fall in sedan sales growth from second half of 2012-13

• New launches in the sub-15 lakh UV segment and relatively fewer

launches in the sedan segment made UVs the preferred choice of

buyers in 2011-12 and 2012-13.

• Coupled with the novelty factor, attractive pricing of these models

made them extremely competitive to mid-size sedans (Volkswagen

Vento, Ford Fiesta, Hyundai Verna, etc).

• Thus, demand for UVs increased at the cost of demand for sedans.

• On account of this cannibalisation, growth in the sedan segment

moderated significantly during the year (3 per cent growth against

20 per cent in 2011-12).

• With the introduction of Ford EcoSport, we expect mid-size sedans

to continue to face the heat.

Growth in sedan segment moderates as consumers turn to UVs

Fall in sedan sales growth from second half of 2012-13

• However, the overall growth rate of utility vehicles would moderate

significantly in 2013-14 (6-8 per cent) from the levels of 2012-13, given

the higher base and fewer new launches expected.

Growth in sedan segment moderates as consumers turn to UVsFall in sedan sales growth from second half of 2012-13

About Ford• Established in 1995, Ford India Pvt Ltd (FIPL) manufactures and distributes

automobiles and engines from its production facilities at Maraimalai Nagar,

near Chennai.

• The company's models like the Endeavour, Fiesta and Figo are

manufactured at its production facility in Chennai (installed capacity of

200,000 units for vehicles and 340,000 units for engines).

• FIPL is a wholly owned subsidiary of Ford Motor Company, USA. It is the

sixth-largest carmaker in India after Maruti Suzuki, Hyundai, Tata,

Mahindra and Chevrolet, with a market share of 3 per cent in 2012-13.

About Ford

• In March 2012, FIPL announced its intention to set up a second plant in

India at Sanand in Gujarat with an investment of Rs 45 billion.

• The plant is expected to have an initial capacity of 240,000 cars and

270,000 engines and is likely to be operational in 2014.

• By 2014, FIPL's Chennai and Sanand plants will have a combined

capacity of 440,000 cars and 610,000 engines, annually.

• In 2010-11, Ford had announced that it would launch eight compact

cars in India by 2015.

• Ford India is expected to launch Ford Focus 2WD and B Max by the

end of 2013-14. In 2012-13, Ford India's total domestic passenger vehicle

sales declined by 17 per cent (y-o-y).

• However, FIPL's exports rose by 15 per cent y-o-y.

• Over 2007-08 to 2012-13, the company's domestic sales grew at a

CAGR of 18 per cent, while exports registered a whopping growth

of 70 per cent.

• Currently, FIPL exports 40 per cent of its engine production and

25 per cent of its car production to 35 countries like South Africa,

Nepal, Mexico, Kenya, Bahrain, Angola, Bermuda, Ghana, Iraq,

Liberia, Lebanon, Malawi, Madagascar, Mauritius, Nigeria,

Senegal, Tanzania, the UAE, Zambia, Zimbabwe etc.

• Its share in India's total passenger vehicle exports has increased

from 6 per cent in 2007-08 to 28 per cent in 2012-13.

• Ford plans to make India its export hub and sell its vehicles in

more than 50 countries over a period of time.

About Ford

Annexure


Fuel Mix in passenger vehicles

Almost one out of two cars & UVs sold to run on diesel by 2015-16

• Demand for diesel cars and UVs is expected to increase by a CAGR of 20

per cent to reach about 2.2 million vehicles in 2015-16 from about 0.9

million vehicles in 2010-11.

• The increasing differential between the petrol and diesel prices will

drive dieselisation, taking the share of diesel models to 44-46 per cent of

total car & UV sales over the next 5 years.

• Rate of dieselisation will be higher in the car segment with diesel

contributing to 38-40 per cent of domestic car sales by 2015-16 from 27

per cent at present.

• In the utility vehicles segment, the share of diesel vehicles is expected to

remain constant at around 95-97 per cent, while in the C-van segment, it

is expected to increase marginally to 25-26 per cent from 24 per cent

(estimates) in 2010-11.

• Petrol prices have increased by 37 per cent since its de regulation

while diesel prices have increased by around 15 per cent during

the same period.

• The difference between petrol and diesel now stands at Rs 26.

• Owing to the increasing differential in the prices of petrol and

diesel, the proportion of diesel car sales have gone up to nearly

30 per cent in the 2011-12 from around 26-27 per cent in 2010-11.

• Simultaneously, the launch of small cars fitted with diesel

engines by the OEMs will aid the sales of diesel models.

Almost one out of two cars & UVs sold to run on diesel by 2015-16

Proportion of petrol, diesel and CNG in passenger vehicles (cars+utility vehicles)

Dieselisation to grow at a faster rate in the small car space

Dieselisation to increase to 60 per cent in the sedan segment

• Traditionally, dieselisation in the sedan segment has been higher

than in the small car segment.

• Proportion of diesel sedans in domestic sedan sales increased to

more than 50 per cent in 2010-11 from around 31 per cent in

2005-06. By 2015-16, we expect dieselisation in sedans to increase

to almost 60 per cent .

Over one-out-of-three small cars sold to run on diesel by 2015-16

• In the small car segment, the share of diesel vehicles in total

sales increased at a slow pace from 19 per cent in 2005-06 to

around 22-23 per cent in 2010-11.

• The slow growth in dieselisation was partly on account of non-

availability of diesel variants among the small cars models of Maruti

and Hyundai, the top 2 players in the small car segment.

• However, with the entry of several OEMs in the small car segment,

the share of diesel cars in total sales is expected to increase.

• Introduction of diesel variants of popular models like Ford Figo,

Nissan Micra, Chevrolet Beat and Volkswagen Polo has provided

consumers with the choice of owning a diesel car even in the

compact car segment.

• Driven by competition from these OEMs, Maruti and Hyundai are

also expected to provide a diesel option on their existing as well as

proposed models.



• As a result, we expect the share of diesel cars in the small car

segment to go up to 33-35 per cent by 2015-16.

• Proportion of diesel sales in small cars to grow at a faster rate.



Difference between petrol and diesel engines

• Diesel and petrol engines use different technologies with fuel

mixing and compressing techniques being different in both engine

types.

• Differences in these techniques ensure higher compression ratios

for diesel engines.

• Though diesel engines are heavy, their fuel efficiency is higher

due to higher energy density (contains about 15 per cent more

energy by volume).

• While environmentalists have expressed their concerns on the

problems caused by use of diesel as vehicle fuel, agencies like

ACEA believe that diesel engines use lesser fuel owing to higher

fuel efficiency and also lead to lower carbon emissions as

compared to petrol engines.

• In the past, diesel engines were noisy and gave out foul odour.

• However, improvement in technology over the years has led to

the development of sophisticated diesel engines leading to

increasing acceptance of diesel as a car fuel.

Difference between petrol and diesel engines

Petrol versus diesel: Cost Economics

Difference in prices of petrol and diesel has led to higher dieselisation

• Since its deregulation in June 2010, petrol prices have increased by

37 per cent and are currently at Rs 71 (Mumbai prices) to the litre.

• During the same period, prices of diesel have increased only once,

by 15 per cent (to Rs 45.84 Mumbai).

• As a result, the gap between the prices of the two fuels has widened

significantly to Rs 26 per litre, which has led to the preference for

diesel cars among consumers.

Difference between the prices of petrol and diesel is very high

Running cost of diesel is 22 per cent less than that of petrol

• Running cost is a function of mileage and the distance travelled.

• Assuming the distance travelled by a petrol car and a diesel car to

be the same, the cost of running a diesel car is 22 per cent lower

than that of a petrol car.

• This cost advantage accrues from a combination of lower price of

fuel and higher mileage offered by diesel cars.

• Mileage of a diesel car is around 25 per cent higher than that of a

petrol car.

The following exhibit shows savings of Rs 19 per km if diesel is

used and Rs 26 per kilometer if CNG is used.

Running cost of diesel is 22 per cent less than that of petrol

Break even is achieved faster at higher distances

• Cost of ownership of a car includes interest cost, fuel cost,

insurance and maintenance cost.

• Diesel cars typically cost Rs 70,000-100,000 more than petrol cars.

Higher capital expenditure entails higher insurance and interest

costs.

• Maintenance costs are also higher for a diesel car.

• However, these higher costs are partly offset by the savings in

fuel costs with diesel being priced lower than petrol.

• Assuming distance travelled of 50 km per day (18,000 km per

annum), the additional capital cost incurred on diesel cars can be

recovered through savings in running costs over a period of 3.5-

4.0 years.

• If we increase the distance travelled per year to 20,000 km, this

will be achieved faster at around 2-3 years.

• Similarly, at 25,000-30,000 km p.a., the owner of a diesel vehicle

will cover the extra cost incurred on the purchase of a diesel car

(compared to a petrol vehicle) in just 1.5 years through savings in

fuel costs.

Break even is achieved faster at higher distances

Benefits of lower operating cost of diesel leads to break even in 3.5-4 years

OEMs keen on setting up diesel capacities

• The competitive scenario in the market has changed over the last

of couple of years with OEMs other than the top 3 players - Maruti

Suzuki, Hyundai and Tata Motors - entering the Indian markets.

• Further, their foray into the most lucrative compact and sub

compact car segments changed the fuel dynamics in the industry.

• In 2010-11, while the total number of models in the small car

segment doubled from 11 in 2005-06 to 24, the number of models

with a diesel variant tripled from 3 to 9.

• For several models, diesel forms 70 per cent of the demand as

against 50-55 per cent a year ago.

To meet the rising demand, OEMs have started to focus on

increasing capacities of diesel engines:


• Maruti has announced its plans to increase capacities for diesel

engines to 0.29 mn from the current level of 0.25 mn at its diesel

engine plant in Manesar till 2013.

• Ford has invested Rs 3.2 billion to expand its power train facility in

Chennai to 0.33 million units from 0.25 million units due to

constraints in its capacities to meet the demand for diesel variants of

Ford Figo.

• General Motors commissioned a flexi-engine plant in Talegaon with

an initial capacity of 0.16 million units, scalable to 0.3 million units in

November, 2010.

• This plant can produce both petrol and diesel engine and capacities can

be adjusted to meet the rising demand for diesel.

• GM introduced the diesel variant of Chevrolet Beat early 2011-12, the

lowest priced diesel vehicle in the compact segment that uses diesel

engines manufactured in this plant.

• Hyundai is also considering setting up a diesel engine plant in India at

an investment of Rs 4 billion.

• This will improve localisation of diesel engine components for existing

models leading to reduction in their prices.


To meet the rising demand, OEMs have started to focus on increasing

capacities of diesel engines:

• In addition to this, it is also thinking of launching diesel variants of existing

models like the i10 and Santro to counter competition from other models in

the segment.

• The only uncertainty stopping players from ramping up capacities for

diesel engines quickly is the fear of diesel deregulation or any differential

tax/levy on diesel variants by the government (i.e. higher excise

duty/registration charges on diesel cars).

• These measures, if implemented, will either make diesel costlier or lead to

an increase in the prices of diesel cars.

• Even if the government increases excise duties on diesel cars or reduces

subsidies on the fuel, we expect diesel penetration to be not less than 40 per

cent by 2015-16 as the differential in the cost of ownership will continue to

remain high.


CNG/LPG to contribute to 9-10 per cent of car sales by 2015-16

• With more CNG/LPG refueling points and service centers being

established, CRISIL Research expects sales of such vehicles to increase

over the next 5 years, presenting a cost-effective alternative to diesel cars.

• During 2005-06 to 2010-11, 300 CNG stations were set up across 50 cities.

• CRISIL Research expects the number of these stations to increase to

almost 570 by 2014, covering another 50-60 cities.

• In 2010-11, CNG/LPG cars accounted for 6 per cent of total cars & UV

sales.

• While offering a mileage similar to that of diesel cars, CNG/ LPG are

cheaper by about Rs 6 per litre.

• We therefore expect almost 10 per cent of new cars & Uvs sold over the

next 5 years to run on CNG/LPG.

Used car market-demand review and outlook

Indian used car market to triple in size by 2016-17

• Used car sales in India have more than doubled to 2.6 million

units over the past five years, posting a 22 per cent CAGR during

2006-07 to 2011-12.

• This is faster than new car sales, which grew at a 13 per cent

CAGR during the period.

• In value terms too, used car sales posted a 23 per cent CAGR to

reach Rs 520 billion during 2006-07 to 2011-12.

Used car sales volumes to triple...

• The underlying factors for both new car and used car sales are the

same: rising household incomes, low penetration levels (13 cars

per thousand) and launch of new models.

• Other salient factors that are aiding growth in used car sales are

declining holding periods of cars and the lower initial price of a

used car (given price-sensitive Indian buyers).

• In the next 5 years (2011-12 to 2016-17), CRISIL Research expects

the used car market to triple, with further lowering of holding

period of cars and increasing share of organised players in the

market aiding growth.

Used car sales volumes to triple...

...revenues to grow correspondingly

• Similarly, the rising share of organised players, mainly OEM-led

companies, in the used car market, will ensure transparency and

better valuation of used cars and improvement in service levels.

• This along with a marginal improvement in the share of sedans

will aid increase in realisations.

• Hence, growth in used car market and marginal improvement in

realisations is expected to help industry grow by 24-26 per cent in

value terms to reach a size of Rs. 1,554 billion by 2016-17.

...revenues to grow correspondingly

More used cars to sell per new car sold

We expect used car sales to continue to post a 22-24 per cent CAGR (volume terms) during the next five years, touching 7-8 million units. The ratio of new to used car sales is projected to reach 1:1.8 by 2016-17 from 1:1.3 by 2016-17.

Small cars dominate used car market too

• Higher proportion of small cars in new car sales ensures that the

share of such cars in the used car market is also correspondingly

high.

• Small cars dominate as they are relatively affordable to sedans. A

larger proportion of total addressable households are below the

threshold income needed to afford a sedan.

• Moreover, as carmakers continue to launch newer small car

models at attractive price points, the average holding period for

such cars is also declining.

• As a result, in the used car market too, small cars dominate,

accounting for two third of total sales. In the next 5 years too, we

expect this share to remain constant.

Share of small cars to remain high in used car sales

Growth drivers

Declining holding period of new cars

• In the past five years, the Indian car market has been flooded with

new models.

• This has led buyers to upgrade to newer models faster, thus

pulling down the average holding period of cars from 4.5-4.7 years

in 2006-07 to around 3.9-4.1 years in 2011-12.

• This has in turn translated into a higher number of used cars.

• The growing presence of company-led OEMs in the used car

market will also aid lower holding periods, as these companies

push sales of newer models through exchange offers for old cars.

• CRISIL Research expects the holding period to decline further to

3.4-3.6 years by 2016-17, supporting growth in used car sales.

Average holding periods to shrink further

Large number of potential first car buyers

• The Indian car market is highly underpenetrated with only 13

cars per thousand people.

• Further only 19-20 per cent of the addressable household

(households above income needed to buy the cheapest available

car) actually own a car.

• Further, used cars have a lower initial price, which makes them

appealing to price-sensitive Indian buyers.

• Together, these factors ensure that used cars sales continue to

grow exponentially in the next five years.

Used Car market-industry Structure

Organised players slowly gaining share in the used car market

• In the past few years, used car sales in India have grown faster than

new car sales, with the used car to new car ratio improving to 1:1.3 in

2011-12 from 1:0.9 in 2006-07.

• A rise in the share of organised players (OEM-led used car companies

like Maruti True Value, Ford Assured, etc. and players with pan India

presence in the used car market, namely Carnation) in the past 5

years has contributed to this growth.

• The entry of organised players, including car manufacturers (OEMs),

in the used car industry will reduce the holding period of cars, as

these players lure customers through exchange schemes to boost

demand for new cars.

• Used car transactions through organised players will also improve

lenders' confidence and reduce credit risks for the financier.

• Most organised dealers receive used cars in exchange of their new

cars sold.

• However, at times, OEM-led companies may not want to certify

these cars as they may not comply with their standards.

• In such cases, an organised dealer may sell such cars at a low

margin to unorganised dealers.

• However, in contrast to developed economies, unorganised players

still dominate the used car market in India.

• A large number of used car sales in India do not involve a third-

party entity and take place directly.

• Further, a large part of the used car market depends on

unorganised dealers and in some cases, on brokers who eventually

direct them to unorganised dealers.

Organised players slowly gaining share in the used car market

Transaction cycle for a used car

• Use of web-based listings for used car transactions is also gaining

pace. Portals like carwale.com, sulekha.com, gaadi.com and

others offer facilities for listing.

• To elaborate, a dealer or an individual can list his/her used car

online and the websites act as intermediary in getting the buyers

to meet the sellers. Usually, the website collects a listing fee for

the services offered.

Transaction cycle for a used car

Organised players to form one-fourth of used car market by 2016-17

• The share of organised players in the used car market was as less as 3-5 per

cent in 2006-07 with the existence of only one organised OEM affiliated used

car player: Maruti True Value.

• However, with an objective of improving the overall new car buying

experience and to push new car sales, other OEMs too embarked upon the

used car business.

• Consequently, with nearly every OEM developing their own used car

brand, the market became more organised.

• The share of organised players in total used car sales is estimated to have

risen to 15-17 per cent in 2011-12 per cent from an estimated 3-5 per cent in

2006-07.

• Of this, Maruti True Value controls over 50 per cent.

• By 2016-17, we expect organised players to constitute nearly a quarter of

used car sales.

Share of organised players to improve

• Advantages of a more organised used car market are:

• Transparent transactions: Selling or buying a used car through

an organised dealer or an OEM-led company makes the

transaction more transparent, helping both parties get a fair

valuation.

• Improved service: Growth in the sale of used cars is largely

dependent on the confidence of buyers.

• Organised players have started offering a warranty of 6-12

months on used cars.

• In addition, the quality of refurbishment and overall service has

also improved.

Share of organised players to improve

Used car market-dealer profitability

Organised financiers to remain cautious

• Used car financiers, have usually been cautious while lending to used

car buyers due to the presence of a large number of unorganised

dealers/ brokers, which leads to a high valuation risk.

• Financiers, especially the organised ones: banks, NBFCs and captive

financing companies therefore have their own valuers who assess the

price of the vehicle.

• The loan-to-value (LTV) ratio is then determined on the assessed value

and not on the selling price.

• Used car loans have a lower average ticket size, lower tenure, higher

yields as compared to loans for new cars.

• Interest rates for used car financing is 300-400 basis points higher than

in the case of new car financing, which gives organised financiers

higher yields.

• However, as unorganised dealers would continue to dominate the

used car market, we expect organised financiers to remain

cautious, as most transactions by unorganised dealers carry a high

risk.

• Moreover, the credit profile of a used car buyer is weaker than a

new car buyer, as most used car buyers are first-timers upgrading

from two-wheelers.

• Thus, we expect the share of organised financiers to remain stable

in the next five years.

Organised financiers to remain cautious

Organised financiers to wait and watch

Used car business enhances dealers' margins, will aid dealers to better handle competitive pressures of new car business

• As used car transactions are highly subjective to vehicle age,

valuation, condition of the car, etc, dealers have a better bargaining

power with used car sellers.

• In case of new cars, dealers would forgo their margins for several

reasons: incentives received from the manufacturer on meeting

targets, dealer payouts by financiers, future service income expected

from the customer, lower growth in sales per dealership with rising

competition.

• On the contrary, a dealer enters into a used car transaction due to

the following reasons:

1. To cushion overall margins amid an increasingly competitive

scenario in new car sales,

2. Facilitating used car sales through provision of prompt

exchange option,

3. To shield margins during times when new car sales are

witnessing a down cycle.

• Below, we examine at margins that an organised dealer earns

from a used car transaction vis-a-vis a new car transaction.

Used car business enhances dealers' margins, will aid dealers to better handle competitive pressures of new car business

Dealer margins for new versus used cars

• We have considered a four-year old Maruti Suzuki Wagon R for

exhibiting expenses and margins that dealers incur/ earn in the used

car business.

• We have concluded that on an average, margins earned on used cars

are higher than margins earned on a new car (excluding capital cost).

• While selling and showroom costs on sale of new cars will be higher,

inventory carrying cost including interest cost will be higher in case of

used cars.

• CRISIL Research therefore estimates that used car transactions offer

higher margins to dealers than new cars.

• Presence in the used car business also helps a dealer shield his

profitability during a down cycle when new cars sales are affected and

face competitive pressures of new car business better.

Dealer margins for new versus used cars

Summary

Passenger vehicle sales to decline in 2013-14

Key forecast for the cars and utility vehicles segment

Note: P: Projected; YTD: Year-to-date; H1: Half year

• CRISIL Research expects sales of cars and UVs to decline by 8-10

per cent in 2013-14, due to the following reasons:

1. Anticipation of weak economic growth (lower GDP growth

projections), translating into weak consumer sentiments

2. Sharp rupee depreciation, causing petrol prices to escalate by 3-5

per cent during the year

3. Expected hike of 18 per cent in diesel prices, impacting sedans

and utility vehicles sales

4. Firm lending rates

5. Weak demand momentum exhibited by a sharp volume decline

of 5 per cent during April-September 2013 despite low base (on

account of production disruptions at Maruti Suzuki India's

Manesar plant)


• Decline in volumes during April-September 2013 demonstrates

that consumer sentiments are extremely weak.

• We do not expect sales to recover, as hike in petrol prices and

firm lending rates will prevent any meaningful recovery.

• Additionally, sales of utility vehicles (including vans), which

posted a sharp growth of 32 per cent in 2012-13, is also showing

signs of moderation, with YTD (April-September 2013) sales

declining by 7 per cent.

• We expect hike in diesel prices and the waiting period for

Ford's EcoSport to impact sales in the near term, causing the

segment to post a decline of 6-9 per cent for the full year (2013-

14).


Demand_domestic


• Passenger vehicle sales are expected to decline by 8-10 per cent in

2013-14, impacted by weak consumer sentiments, lower growth in

consumer incomes, rising fuel prices, interest rates and lower

disposable income on account of high inflation.

• This decline over a growth of just 2 per cent and 5 per cent in the

industry in 2012-13 and 2011-12, respectively indicates extremely

weak consumer sentiments.

• Prospects of growth in the consumers' incomes were muted in

2012-13 and will weaken further in 2013-14, as economic growth

remains subdued.

• Further, rising fuel prices and interest rates and taxes, which have

caused the cost of owning a car to rise significantly by ~30 per

cent over the last 3-4 years will continue to deter growth in 2013-

14.

• Hence, the cost of owning a car is expected to increase by 2-3 per

cent, mirroring a 2-3 per cent hike in petrol prices.

• Further, lending is also expected to remain firm.

• Consequently, car sales are expected to decline for the second

consecutive year in 2012-13.

• Sales of utility vehicles are also being impacted significantly by

prolonged weakness in consumer sentiments, coupled with hike in

duties, lending rates and diesel prices.

• Hence, UV sales too are expected to drop by 6-9 per cent after

growing by 52 per cent in 2013-14.

• Sales of vans, which posted a decline of 1 per cent in 2012-13, are

also forecast to decline by 5-7 per cent in 2013-14.


Weak consumer sentiments, high cost of ownership to impact demand

Note: P: Projected; YTD: Year-to-date; H1: Half year

Demand-side indicators worsen in 2013-14

Economy and income growth


• We forecast GDP to grow by 4.7 per cent in 2013-14, marginally lower

than a growth of 5 per cent in 2012-13.

• This is a downward revision from our earlier forecast of 5.5 per cent.

• Lower economic growth impacts consumer incomes as well as the

expectation of income growth in the near term.

• Together, these have a bearing on sentiments, which, in turn, govern

their purchase decisions.

• As a result, PV sales moderated during the last two years (2011-12

and 2012-13).

• Even as sentiments in urban areas are likely to worsen, the

expectation of better rural incomes, largely led by better monsoons,

will boost sales in rural areas.

• We estimate the share of rural areas in total passenger vehicle

sales at ~20 per cent.

• We believe, like in 2012-13, car sales to rural areas will continue to

increase in 2013-14.

• For instance, Maruti Suzuki India Ltd (MSIL) reported a growth of

19 per cent in sales to rural areas in 2012-13, thereby causing the

share of rural areas in total sales to increase to 28 per cent in 2012-

13 from 25 per cent in 2011-12.

Demand-side indicators worsen in 2013-14Economy and income growth

Cost of ownership to remain high


• The cost of owning a car includes fuel cost, maintenance cost,

insurance cost and annual amount payable towards loan

repayment.

• The cost of ownership is estimated to have risen by around 8 per

cent and 6 per cent in 2011-12 and 2012-13, respectively, mainly

due to increase in petrol prices and hike in lending rates.

• This had a major impact on sales of small cars, as potential small

car buyers are more sensitive to interest rates and fuel prices.

• In 2013-14, we expect petrol prices to increase by 2-3 per cent.

Lending rates are also expected to remain firm.

• The combined effect of these factors will push up the cost of

ownership by 2-3 per cent in 2013-14.

Cost of petrol car ownership set to decline

Increase in taxes to impact utility vehicle sales


• Duties and taxes on small cars remain unchanged in the Union

Budget 2013-14.

• However, the excise duty on non-taxi sedans and UVs with engine

capacity exceeding 1,500 cc, length exceeding 4,000 mm and having

ground clearance of 170 mm and above has been increased to 30

per cent from 27 per cent.

• However, owing to the condition of higher ground clearance, less

than five sedan models will be taxed under these provisions.

• On the contrary, most utility vehicles (barring some newly

launched models) will be taxed higher (at 30 per cent).

• We expect the increase in tax to marginally impact demand for

such vehicles.

• Further, demand for luxury cars (priced over $40,000 and/or engine

capacity exceeding 3000 cc for petrol cars and 2500 cc for diesel cars) may

see some moderation, with basic customs duty being hiked to 100 per cent

from 75 per cent.

Increase in taxes to impact utility vehicle sales

Limited supply of new models to hamper growth, especially in UV sales

• Our expectation that the supply side will have a neutral role in promoting

demand growth rests on the assumption that there would be no further

production disruptions during the year.

• However, in case of utility vehicles, huge demand amid limited production

of Ford's will impact growth.

• Based on our interactions with the industry, we believe that the company

EcoSport may work towards increasing the production of the model

sometime in the second half of the year, which may aid growth in the

segment.

New model launches to provide some support to falling sales


• Several new models were launched in 2012-13, especially in the

UV segment, thereby boosting growth.

• We expect these model launches along with new model launches

expected in 2013-14 to continue to drive growth in UV sales.

• Additionally, new launches of models such as , and in the small

car Honda Amaze Grand i10 Wagon R StingRay segment will

seek to somewhat contain the decline in small car sales to 8-10

per cent.

Model launches expected in 2013-14

Economic growth, petrol prices remain key monitorables

• We have based our projections on expectations of 4.8 per cent growth in

GDP and increase of 2-3 per cent in petrol prices.

• However, growth will continue to suffer if these expectations do not

materialise.

• If macroeconomic concerns persist, it will dent the industry's growth

prospects.

Segmental outlook

Small car sales to decline for third consecutive year in 2013-14

• Small cars constitute over half of total passenger vehicle sales and three-

fourths of total car sales.

• Demand for small cars was severely impacted by the economic

downturn and rising cost of ownership in 2011-12 and 2012-13.

• The limited supply of diesel vehicles, despite excessive demand for the

same, also restricted sales growth.

Segmental outlookSmall car sales to decline for third consecutive year in 2013-14

• We expect the key determinants of demand for small cars i.e.

income growth and cost of ownership, to worsen in 2013-14.

• Hence, small car sales are forecast to decline by 8-10 per cent in

2012-13.

Small car sales slide for two consecutive years

• Demand for the segment (as per SIAM classification) suffered the

most (on account of the unavailability of the Mini diesel option in

any of the models), declining by 7 per cent in 2011-12 and further

by 11 per cent in 2012-13.

• On the other hand, in 2011-12, the compact segment (as per SIAM

classification) grew by 3 per cent due to comparatively higher

availability of the diesel option.

• However, compact car sales declined by 7 per cent in 2012-13 due

to the prolonged economic downturn, hike in diesel prices and

only marginal decline in interest rates.

• We expect the proportion of the Mini segment to increase in 2013-

14, with the decline in difference between petrol and diesel prices.

Small car sales slide for two consecutive years

Diesel price hikes to impact growth in sedan sales in 2013-14

• Sedan sales grew by 18 per cent in 2011-12 due to lower

sensitivity to cost of ownership and higher availability of diesel

options as compared to small cars.

• However, with the launch of several new utility vehicles priced

similarly to sedans in 2012-13, consumers opted for UVs, thus

impacting sales in the sedan segment.

• Hence, growth in this segment moderated to 1 per cent in 2012-

13.

• The prolonged economic slowdown and hike in diesel prices

(diesel vehicles constitute ~60-70 per cent of total sedan sales)

will impact sedan sales, causing them to fall by 8-10 per cent in

2013-14.

Trend in sedan sales growth

Difference in average prices of petrol and diesel

Diesel price hikes and duty hikes to cause significant moderation in UV (including vans) sales

• Utility vehicle sales (including vans) grew by 14 per cent y-o-y in

2011-12, outpacing growth in the cars segment (which grew by 2

per cent in 2011-12), as the widening gap between the prices of the

two fuels led to higher demand for sedans and utility vehicles.

• Further, many new models were launched in the segment in 2012-

13.

• Amid rising dieselisation, these new model launches were received

well by the consumers.

• New model launches formed a third of total UV sales. Thus, the UV

segment (including vans) grew by 32 per cent y-o-y in 2012-13.

• However, growth in UV sales moderated since the beginning of the

fourth quarter of 2012-13.

• In the Union Budget of 2013-14, the excise duty on non-taxi

sedans and UVs with engine capacity exceeding 1,500 cc, length

exceeding 4,000 mm and having ground clearance of 170 mm

and above has been increased to 30 per cent from 27 per cent.

• Most utility vehicles (barring some newly launched models like

MSIL's , M&M's and Renault's ) will be taxed higher (at 30 per

cent).

• Ertiga Quanto Duster We expect the sensitivity of sales to hike in

prices to increase on account of persistent weakness in consumer

sentiments.

• Launch of Ford's EcoSport , created a huge demand, impacting

demand for other models.


• However, since the production of the model is capped at 5,000-

6,000 units per month, the waiting period is long.

• Such a scenario is causing sales of other UVs, which are already

witnessing moderation, to decline.

• In 2013-14, we expect diesel prices and duty hikes to cause UV

sales to continue to decline.

• We expect the company's effort to increase the production of its

EcoSport model to limit the decline in sales to 6-9 per cent.


Trend in UV sales

• In 2012-13, many new models were launched in the Rs 8-12 lakh

(ex-showroom) bracket.

• These models garnered significant consumer interest.

• Also, the launch of new models in the UV segment (priced

similarly to the SIAM's 'mid-size' segment) adversely impacted

growth in the sedan segment.

• Additionally, with increasing dieselisation, consumer preference

has shifted from petrol cars to diesel cars and UVs.

• Against this backdrop, the availability of a host of new models

acted as a catalyst for growth in the segment.

• In 2013-14, however, we expect UV sales to decline, mainly led by

the impact of the prolonged downturn and hike in diesel prices.

Trend in UV sales

New model launches and UV (not including vans) sales growth in 2012-13

Demand-exports

Exports stage a recovery in 2012-13

• Exports of cars & utility vehicles (UVs) grew by 9 per cent in

2012-13 after a marginal decline of 0.4 per cent in 2011-12.

• Weak global demand, especially in Europe, one of the largest

export markets, impacted demand in 2011-12.

• In 2012-13, sluggish demand in Europe and increase in import

and excise duty rates in Sri Lanka, which constitutes nearly 5 per

cent of the total exports of major exporters such as Maruti Suzuki

India Limited (MSIL), limited growth to single digits.

Export sales and growth trend

• Hyundai Motors India Limited (HMIL), the largest exporter from

India, clocked a 9 per cent growth in exports during 2012-13 with

its i10 and i20 models performing well.

• HMIL supplies to over 100 destinations across West Asia, Asia

Pacific and the European region.

• MSIL, the second largest exporter from India, exports its cars to

Europe, Algeria, Chile, Sri Lanka and Nepal. Export sales of MSIL

declined by 5 per cent due to slower growth and increasing

competition in the export markets, in addition to the impact of

increase in import and excise duty rates on vehicle imports in Sri

Lanka.


• In 2012-13, Honda started exporting to South Africa while

Renualt started exporting to South Africa.

• Brio Duster Also, Volkswagen started exporting Polo and Vento

to the Middle East and Africa adding to its existing destinations

in the Middle East and South Africa.

• M&M started exporting its SUV, XuV 5oo to Europe apart from

its existing market, South Africa.

• HMIL maintained its share at 47 per cent while that of MSIL and

Nissan fell with a decline in their exports during the year.

• However, the share of other players like Honda, Volkswagen,

Toyota, M&M and Ford increased due to growth in the export

volumes.


Player proportion in total exports from India

Exports grew by 14 per cent in the first half of 2013-14

• Passenger vehicle exports grew by 14 per cent y-o-y during the first

half (April-September) of 2013-14.

• Exports of the top two exporters from India - HMIL and MSIL -

grew by 5 per cent and 4 per cent, respectively.

• Exports of Ford and Honda increased as they started exporting

their new models -EcoSport and Amaze.

• Despite no new offerings for over a year, players such as Toyota

and Volkswagen managed to grow their exports significantly

during the first half of 2013-14.

• We attribute increased focus on export to the weak rupee (which

causes export realisations to soar) and decline in volumes in the

domestic market.

Exports to grow by 10-12 per cent in 2013-14

• In 2013-14, we expect exports to grow by 10-12 per cent with

players tapping newer export geographies to tide over low

operating rates.

• The share of imported components in cars manufactured in India

(by foreign players) remains high.

• Even for MSIL, despite its long-standing presence in the Indian

markets, direct and indirect imports constitute about 15 per cent

of its raw material cost.

• We believe that this number could be higher for relatively newer

entrants, making their cost and hence their profitability

susceptible to currency movements.

• Therefore, apart from improving operating rates and

realisations, exports also serve as a natural hedge against

imports of raw material/technology.

• In 2013-14, the share of players other than those of MSIL and

HMIL is expected to increase as players such as Ford, Honda

and Renault-Nissan plan the export of their India-specific

models to other markets in Africa and Asia, which have

consumer preference similar to that of India.

Exports to grow by 10-12 per cent in 2013-14

Share of exports in total sales to increase marginally

Car & UV exports have grown at 21 per cent CAGR in the past 5 years

• Cars & UVs exports have grown at a CAGR of 21 per cent during

the last five years (2007-08 to 2012-13) with volumes of the top

two exporters - HMIL and MSIL - growing by 12 per cent and 18

per cent, respectively during this period.

• Sales of other players grew at a significantly high CAGR of 53 per

cent as players such as Nissan and Toyota started exporting their

cars from India and as Renault-Nissan JV and Ford India develop

India as an export base.

• Small cars constituted over 75 per cent of car exports, while

Europe and Asia were the key export destinations.

• However, many OEMs started exporting sedans and UVs in 2011-

12 and 2012-13.

• As a result, the share of small cars fell to 82 per cent in 2012-13

from 86 per cent in 2011-12.

• Over the last couple of years, several OEMs started looking at

India as their export base to avail of the low-labour cost

advantage.

• Besides, location of export hubs in markets with high growth

potential will give OEMs the benefits of scale.

• This will also enable competitive pricing, one of the pre-

conditions for operating in the small car market.

Car & UV exports have grown at 21 per cent CAGR in the past 5 years

Car exports to more than double over the next 5 years...

• CRISIL Research expects car exports from India to more than

double over the next 5 years and reach almost 1 million by 2017-

18.

• Plans by global OEMs to set up export-oriented manufacturing

facilities in India will enable a 12-14 per cent growth during this

period.

• The combined shares of HMIL and MSIL, which accounted for

68 per cent of the total car exports in 2012-13, will decrease to

about 60-63 per cent by 2017-18, following higher exports by the

newer entrants.

• Small cars will, however, continue to constitute significant

chunk of car exports over the next 5 years.

...as India gains prominence as an export hub

• Given the availability of skilled labour at low costs and the

development of industrial clusters, which enjoy tax and non-tax

incentives, India presents a good opportunity for global players

to set up their manufacturing bases.

• Further, strong domestic demand will also help companies

achieve a higher scale of production and further lower

production costs.

• MSIL, which has invested heavily in setting up capacities in

Gujarat, is expected to capitalise on the proximity of its facilities

to the Mundra port, to boost its exports.

Players add export-focused capacities

• The Renault-Nissan JV has set up a plant near Chennai with an

annual production capacity of 400,000 units.

• Nearly three-fourths of the plant's capacity is expected to be

dedicated to exports.

• In 2012-13, Renault started using this facility to export its newly

launched Duster to the United Kingdom and Ireland.

• Ford has invested Rs 40 billion in Gujarat to set up a plant with

an initial capacity of 240,000 units scalable to 400,000 units.

• Ford started exporting Figo in 2010-11 to Bahrain, Kenya,

Mexico, Nepal, South Africa, North Africa, the Caribbean Islands

and Central Asia.

• Export of Figo to newer markets and the introduction of other

models, which may subsequently be exported, will help Ford

increase its share of exports.

• Toyota and Volkswagen, newer entrants to the export market,

are also tapping the African and the Middle Eastern markets for

their cars.

• General Motors has plans to increase exports from India over the

next 5 years.

• Tata Motors has also started exporting its Nano to markets like

Nepal and Sri Lanka and is planning to explore other export

markets to improve the utilisation rates of its plant.

Players add export-focused capacities

Realizations

Favourable product mix, dieselisation aid growth in net realisations

• The net realisations of Indian carmakers grew by 18 per cent in 2012-

13, led by the following factors:

• Increase in demand for diesel vehicles

A sizeable shift in demand from petrol to diesel vehicles owing to a huge

gap in the prices of both fuels caused realisations to increase sharply. Diesel

models are priced 20-25 per cent higher than petrol models.

• Increase in prices

Car prices are estimated to have risen by 3-5 per cent (y-o-y) in 2012-13.

• Faster growth in utility vehicle (UV) sales

New model launches and preference for diesel vehicles led to faster growth

in UV sales when compared to small cars. Thus, the increasing proportion

of relatively higher priced vehicles (UVs) pushed up growth in realisations.

Growth in realisations to moderate to 3-4 per cent in 2013-14

• We expect realisations per vehicle to grow at a slower rate of 3-4

per cent (y-o-y) in 2013-14, owing to the following factors:

1. We expect the proportion of petrol-based cars to increase

marginally (on account of the contracting difference in prices of

petrol and diesel), thereby impacting realisations negatively.

2. For leading players, sales of UVs will suffer on account of the

impact of new models launched by competitors amid an

expected contraction in UV sales in 2013-14.

3. Despite the above factors, price hikes and higher export

realisations (due to rupee depreciation) will aid a 2-3 per cent

growth in realisations in 2013-14.

Net realisations to improve at slower pace in 2013-14

Input costs

Input cost to rise only marginally in 2013-14

• Input costs of leading players rose by about 17 per cent y-o-y in

2012-13, despite a decline of nearly 1 per cent in the basic raw

material index.

• This is mainly on account of the shift towards larger vehicles

such as utility vehicles.

• Additionally, the shift towards diesel vehicles and the rupee's

depreciation (imported raw materials constitute 15-20 per cent of

total input cost for leading players) also escalated input cost.

• We expect basic raw material cost to increase by 0-2 per cent y-o-

y in 2013-14, mainly due to an increase in prices of aluminium

and plastics.

• Prices of iron are are expected to fall, while that of steel are

expected to remain flat.

• We expect prices of tyres also to fall, owing to an expected decline

in natural and synthetic rubber prices.

• We expect raw material cost per unit to increase by 2-3 per cent y-

o-y, after posting a growth of 13 per cent y-o-y in 2012-13.

• Higher input prices coupled with the impact of rupee

depreciation, will cause raw material cost to increase.

• However, the shift towards lower-cost vehicles will limit the

increase in cost.

• On account of these factors, raw material cost-to-sales ratio

will decline marginally.

Input cost to rise only marginally in 2013-14

Basic raw material cost to inch up marginally

Raw material cost-to-sales ratio to decrease marginally

RM: Raw material; P: Projected

Margins

Sharp realisation growth led to margin expansion in 2012-13

• Operating margins improved phenomenally by ~270 bps y-o-y

in 2012-13 due to price hikes and shift of sales mix towards

higher realisation vehicles such as utility vehicles and diesel

vehicles.

• Further, even as other costs increased, it could not

commensurate the sharp growth in realisations causing margin

expansion.

• Also, impact of merger of leading car maker Maruti Suzuki

India Limited (MSIL), with its higher margin generating group

company Suzuki Powertrain India Limited (SPIL) also aided

margin expansion.

Easing input costs to result in higher margins in 2013-14

• In 2013-14, we expect realisations to grow by 3-4 per cent on

account of price hikes and higher export realisations despite a shift

in sales mix towards lower priced products.

• Shift in product mix towards petrol powered vehicles and lower

sales of utility vehicles (of sample set company) on account of

competition from new launches such as Ford EcoSport will led to

moderation in realisations growth.

• However, we expect efforts to indegenise production to minimize

the adverse impact of rupee depreciation to some extent.

• Also, as most imports are yen denominated, yen depreciation will

seek to somewhat mitigate the impact of sharp rupee depreciation.

• Further, per unit input cost is expected to go down on account of

change in product mix.

• On account of these factors, we expect lower input costs to enable

margin expansion to the extent of 80-120 bps y-o-y.

Easing input costs to result in higher margins in 2013-14

Operating margins to improve in 2013-14

• Operating margins of other players are lower as compared to those

of leading players.

• We estimate margins of these players to have eroded during 2011-

12 due to higher input and selling costs.

• In 2012-13, a favourable product mix aided improvement in

realisations for certain players.

• However, higher selling costs, pricing pressures and low operating

rates are estimated to have resulted in flat or lower margins.

• In 2013-14, we expect margins of players exporting from India to

remain stable or fall only marginally as higher export realisations

would partially offset rising input costs.


• Further, barring those of Japanese car OEMs, margins of other

players are likely to be severely hit on account of rupee

depreciation amid limited ability to pass on rising input cost in

order to remain competitive in a contracting market.


Player-wise margins

Trend in industry margins

Note: Data for industry includes Hyundai and Maruti for 2003, Hyundai, Maruti and Honda for 2004, Hyundai, Maruti, Honda and Toyota for 2005 and H

Easing input cost to lead to improvement in margins

Operating rate to continue to decline

• Capacity utilisation (effective) is estimated to have declined to 77

per cent in 2011-12 from 83 per cent in 2010-11 following a

moderation in demand and commissioning of additional

capacities in 2011-12.

• Owing to lower demand, especially for passenger cars, operating

rates fell to 75 per cent in 2012-13.

• As demand for passenger vehicles is expected to decline in 2013-

14, we expect capacity utilisation to decline to 64 per cent.

Operating rates to continue to decline in 2013-14

RoCE to improve for leading players

• In 2011-12, higher raw material costs, royalty and selling costs

weighed down the industry's operating margins.

• Moreover, production problems at Maruti Suzuki's plants led to a

drop in the industry's profits, which reduced RoCE to 14 per cent

in 2011-12 from 22 per cent in 2010-11.

• In 2012-13, increased profitability caused RoCE to expand by ~310

bps to 17.3 per cent.

• Like in 2012-13, we expect RoCE to increase by ~100 bps in 2013-

14, mainly due to improvement in profitability.

RoCE to improve with improvement in margins

Supply

Supply

Pace of capacity additions slowed in 2012-13

• The total domestic installed car manufacturing capacities are estimated to

have increased by 13-15 per cent in 2011-12, with the top two manufacturers

- Maruti Suzuki India Ltd (MSIL) and Hyundai Motors India Ltd (HMIL) -

accounting for more than 50 per cent of the additions.

• However, the pace of demand growth slowed in 2012-13 as labour issues

impacted planned capacity addition at market leader MSIL's Manesar plant.

• Thus, in 2012-13, installed capacity is estimated to have risen by 8 per cent

with majority of the additions coming from Renault-Nissan JV, Toyota

Kirloskar Motors and Mahindra and Mahindra Ltd (M&M).

• We expect installed capacities to increase by 10-11 per cent in 2013-14, with

MSIL and Ford India constituting over 90 per cent of the total expected

incremental capacities.

Capacity utilisation rates drop as demand slows

• Slowing demand for cars along with production problems at MSIL (due

to labour strikes), pulled down capacity utilisation (effective) rates to 77

per cent in 2011-12 from 83 per cent in 2010-11. In 2012-13, PV sales

grew by a mere 2 per cent.

• Effective capacities are estimated to have grown by 6-7 per cent in 2012-

13.

• Hence, operating rates are estimated to have declined to 75 per cent.

• In 2013-14, we forecast capacity utilisation (effective) to decline further

to 57 per cent with a slow recovery in demand growth amid capacity

additions.

• On installed capacity basis, we estimate operating rates to have

declined to 67 per cent in 2012-13 (from 69 per cent in 2013-14) and

further expect them to fall to 64 per cent in 2013-14.

Trend in capacity utilisation

Note: Includes Maruti Suzuki India Limited, Hyundai Motors India Limited, Tata Motors Limited, Ford India, Renault-Nissan JV, General Motors India, To

MSIL and Ford to expand capacities in 2013-14Estimated player-wise installed capacity (units in million)

• Few major expected capacity additions include:

• MSIL has invested Rs 17 billion at its Manesar plant to

commission an additional 0.25 million units to the existing

capacity of around million units.

• This capacity was set to get commissioned in 2012-13.

• However, labour issues at the Manesar facility led to delays.

• We expect these capacities to come onstream in 2013-14.

• In addition, MSIL plans to invest Rs 120 billion to set up a plant in

Gujarat for manufacturing 1 million units per year.

• Proximity of the plant to the Mundra port will also aid exports.

• However, land acquisition issues in Gujarat are likely to postpone

the date of commissioning.

MSIL and Ford to expand capacities in 2013-14

Estimated player-wise installed capacity (units in million)

• According to the company, initial capacity of 250,000 is likely to

commission in 2015-16.

• Ford India has invested Rs 40 billion to establish a greenfield plant in

Gujarat (Sanand).

• The initial capacity of the plant will be 240,000 units (scalable to 400,000

units) and it is expected to get commissioned by early 2014.

• Toyota-Kirloskar Motor had invested Rs 9 billion to increase its capacity

to 310,000 units from the current 210,000 units, to cater to rising demand

for its Etios and Etios Liva models.

• General Motors India has invested Rs 20 billion to increase its capacity

to almost 340,000 from 240,000 units at its Talegaon plant.

• We expect these capacities to get commissioned after 2014-15.

MSIL and Ford to expand capacities in 2013-14

Estimated player-wise installed capacity (units in million)

Demand for diesel cars outstrips existing capacities, waiting periods to ease in 2013-14

• In 2011-12, demand slowed on account of a rapid rise in petrol

prices and growing interest rates.

• Simultaneously, demand for diesel models surged, far outstripping

capacities for such models.

• The waiting period on diesel models also despite significant

discounts, diesel variants were in short supply, thus restricting sales

growth at both ends.

• This led MSIL to increase its diesel car capacities at its Manesar

plant to about 300,000 by the end of 2011-12 from 240,000 in 2010-11.

• In addition, MSIL will also receive 100,000 diesel engines in 2012-13

from Fiat under a contract signed in 2011-12.

• The carmaker has also announced fresh investments of about Rs 17

billion in 2012-13, towards establishment of a diesel engine plant

with an annual capacity of 150,000 units.

• However, supplies from the plant are expected to commence only

by 2013-14.

• In 2013-14, we expect dieselisation in cars to reduce (due to higher

demand for petrol cars in line with our forecast of contraction in

gap between petrol and diesel prices), thus resulting in lowering of

waiting periods for such vehicles.

Demand for diesel cars outstrips existing capacities, waiting periods to ease in 2013-14

Regional dynamics

• The Gurgaon-Manesar region in Haryana is currently the largest cluster,

accounting for about 35 per cent (2011-12) of installed car capacities.

• Going forward, this cluster will continue to remain the largest base for the

Indian cars and UVs industry, considering the large expansions planned by

MSIL - the only major car maker in the state.

• The overall contribution of the cluster to total capacity would continue to be

about 34 per cent by 2013-14.

• Tamil Nadu-Karnataka will continue to remain the second largest supply

cluster.

• The two states' share in total installed capacities will increase to 29 per cent

in 2012-13 from 25 per cent in 2011-12.

• However, the share of this cluster will fall to 26 per cent in 2013-14 with an

increase in the share of other clusters.

• Maharashtra accounts for 26 per cent (2012-13 of the total installed capacity

in the country.

• Tata Motors and Mahindra & Mahindra are two main OEMs, with a large

share of their capacities for cars and UVs in Maharashtra.

• In 2013-14, we expect the state's share in total installed capacity to decline to

24 per cent.

• Gujarat currently houses 7 per cent of the industry's total capacity.

• While its share may not increase in 2012-13, it will grow in 2013-14, with

significant capacities planned by Ford Motors.

• Thus, by 2013-14, we forecast Gujarat to account for 11 per cent of the total

installed cars and UV capacities in the country.

• We expect the share of Gujarat to increase further over the next 3-4 years as

MSIL's new capacities get commissioned.

Regional dynamics

Estimated break-up of total capacities by key cluster

Estimated break-up of total capacities by key cluster

• Growth in these clusters can be attributed to the following factors:

1. Proximity to key component manufacturers

2. Availability of skilled manpower

3. Availability of key infrastructure

4. Electricity

5. Road connectivity

6. Air connectivity

7. Ports

8. Proximity to key domestic markets

9. Favourable state policy and government incentives

10.Ease of land acquisition

11.Focus of projects i.e. domestic versus export focus

Short-term demand trends

Passenger vehicle sales fell y-o-y post festive season in November

• In November 2013, domestic passenger vehicle sales fell by 10.2

per cent year-on-year (y-o-y), mainly due to 8.2 per cent y-o-y

drop in passenger cars coupled with a sharp decline of 14.8 per

cent y-o-y in utility vehicles (UVs) including vans.

• On a m-o-m basis as well, passenger vehicle sales fell sharply by

15.7 per cent post festive season.

• During November 2013, rise in ownership cost due to firm

interest rates and high fuel prices impacted passenger car sales.

• Also, an increase in excise duty on sports utility vehicles

effective from April 2013 continued to affect UV sales which

declined by 9.1 per cent y-o-y.

• Van sales also fell significantly by 28.4 per cent y-o-y.

• Consequently, utility vehicles (including vans) dropped by 14.8

per cent (y-o-y) in November 2013.

• Except in August 2013, domestic passenger vehicle sales posted a

y-o-y decline in the past eight months of 2013-14.

• Cumulatively during April to November 2013 also, passenger

vehicle sales dropped by 5.3 per cent y-o-y.

• This decline was driven by continued uncertainty over income

growth, weak consumer sentiments and high ownership cost of

vehicles.

Passenger vehicle sales fell y-o-y post festive season in November

Passenger car domestic sales trend

Passenger car domestic sales growth trend

Tata Nano sales continued to fall....

• Sales of Tata contributed marginally to the company's total sales

and were only 30 per cent of the past year Nano sales in

November 2013.

• Despite continued efforts to push sales through discounts and

special edition models, sales of Tata Nano failed to improve on

y-o-y as well as on m-o-m basis.

• During April to November 2013, Tata Nano sales declined sharply

by 71.6 per cent y-o-y.

• Besides rising ownership costs, severe competition from the

Maruti Alto 800 continued to impact sales of the Nano .

Mini segment sales skid down again......

• Sales of Mini cars (forming around 34 per cent of the total domestic

sales) fell modestly by 3 per cent y-o-y in November 2013.

• Sequentially also, mini segment sales fell marginally.

• This segment currently includes Spark, Santro, Eon, A-Star, Alto

and Wagon R .

• Sales of nearly all models in the segment declined y-o-y in

November 2013, except Maruti's 800 and Wagon R which

increased y-o-y due to heavy discounts during festive season.

• During April to November 2013, sales of Mini cars rose by 4.7 per

cent y-o-y, led by marginal y-o-y rise in Maruti's Alto and strong

sales of 17.8 per cent and 19.1 per cent in Maruti's Wagon R and

M800 respectively and aided by 6.4 per cent growth in sales of

Hyundai's EON.

Compact segment sales fell y-o-y post festive season in November

• The compact sales (forming around 47 per cent of total domestic

car sales) fell by 5.4 per cent y-o-y in November 2013, mainly due

to drop of 9.2 per cent y-o-y in sales of Maruti's Swift , despite

rise in sales of newly launched Hyundai's Grand i10 and Honda's

Amaze.

• During April to November 2013, sales of cars in compact segment

fell by 2.2 per cent (y-o-y).

• Over the past two years, dieselisation in the segment had

increased significantly (due to widening gap between the petrol

and diesel prices).

• Hence, sales fell on account of hike in diesel prices.

Trend in domestic Mini and Compact sales

Hyundai gains market share

• During April to November 2013, Maruti lost while Hyundai

gained market share marginally.

• Hyundai's share rose on account of launch of the new Grand i10,

while Maruti's market share fell owing to weak domestic

demand.

• Tata Motors share slipped on account of weak growth in sales of

Indica and Indigo.

• Honda's share is estimated to have risen on account of launch of

Amaze during April-November 2013.

Hyundai gains market share

Sedan sales continued to fall in November 2013

• Sales of sedans (super compact and mid-size) decreased by 14.5 per

cent in November 2013.

• Sequentially also post festive season, sedan sales dropped sharply

by 19.2 per cent.

• Barring sales of Maruti's , sales of all other models declined Dzire

significantly on y-o-y basis due to competition from UVs, hike in

diesel prices and impact of prolonged economic downturn on

consumer sentiments.

• During April to November 2013, sales of sedans fell by 8.6 per cent

y-o-y.

• However, Maruti's market rose sharply on account of low base of

last year coupled with higher demand for its flagship model Swift

Dzire .

Sedan segment sales: Domestic sales

Sedan segment: Market share of key players

Discounts rise on account of festive season in November 2013

• Interactions with dealers indicate that average discounts for the

month of November 2013 have risen sequentially on the back of

festive season.

• Hyundai retained its free insurance scheme on all variants and

offered a cash discount of up to Rs 15,000 to boost sales.

• Tata Motors also continued with its discounts on the Indica and

increased exchange bonus by Rs.5,000.

• MSIL Vista similarly offered a discount of Rs 15,000 on its Swift .

We expect discounts to increase over the next couple of months.

Small car segment: Trends in discount

Note: The above discount index indicates discounts offered for key models by top three OEMs (Maruti, Hyundai and Tata Motors). These models constitute around 35-40 per cent of sales in small car segment (excluding Nano).Discount includes cash discounts, insurance and accessories.

Exports fell y-o-y in November 2013• Exports of passenger vehicles dropped by 13.6 per cent y-o-y in November

2013, mainly due to y-o-y fall in exports of Hyundai and Maruti.

• During April to November 2013, however, exports grew by 9.6 per cent y-o-

y primarily due to the sharp rise in exports of Renault's and Ford's i Duster

Eco Sport n past five months .

Key Developments:

New models launched:

• Mahindra and Mahindra (M&M):

• Launched XUV500 variant XUV500 W4 , powered by 2.2 litre mHawk 140

bhp diesel engine, priced at Rs. 10.83 lakhs (ex-showroom Mumbai).

• Launched a variant of its multi-purpose vehicle (MPV) Xylo as Xylo D2

MAXX , with 9-seats options at Rs. 7.34 lacs (ex-showroom, Bangalore).

• The new 9-seater MPV is equipped with BS III compliant 2.5 litre mDI

CRDe engine, giving a mileage of 14.95 kmpl.

Key Developments:


• Hyundai launched two variants of its compact car Grand i10 with automatic

transmission - Grand Sportz AT and Grand Asta AT , priced at Rs 5.64 lakh

and Rs 5.92 lakh respectively (ex-showroom Delhi).

• Mercedes-Bens launched a variant of luxury C-Class car Edition C , priced

at Rs. 39.16 lakh (ex-showroom Mumbai).

• The new variant is equipped with 4-cylinder, 2143 cc diesel engine with 7G-

Tronic Plus automatic transmission, has rated output of 125 kW @ 3000-4200

rpm and a rated torque of 400 Nm @ 1400-2800 rpm.

• BMW India

• Launched a petrol variant of BMW Z4 roadster, priced at Rs 68.9 lakh (ex-

showroom Mumbai).

• BMW India

• Launched an updated version of 5-Series , priced between Rs. 46.9 lakh to Rs.

57.9 laks (ex-showroom Delhi).

• Tata Motors launched the CNG versions of its mid-sized sedan Tata Indigo

and compact car Tata Indica under its emax series priced up to Rs 5.27 lakh

(ex-showroom Delhi).

• The new Tata Indigo emax is priced between Rs. 4.99 lakh to Rs 5.27 lakh

(ex-showroom Delhi), while the new Tata Indica emax is priced between Rs

3.99 lakh and Rs 4.26 lakh (ex-showroom Delhi) respectively.

• Volvo India launched upgraded variants of S60 and XC60, priced between

Rs 29.90 lakh and Rs 46.55 lakh (ex-showroom Delhi).

Key Developments:


• General Motors India launched a new version of Chevrolet Cruze ,

priced between Rs 13.75 lakh and Rs 16.15 lakh.

• Volkswagen India launched an upgraded version of its mid-size

sedan Vento TSI at Rs 9.99 lakh - (ex-showroom New Delhi).

• The new mid-size sedan is powered by a 1.2 litre turbocharged petrol

engine which produces 105 ps of power and 175 Nm of torque.

Key Developments:


New models to be launched:

• Mercedes-Benz announced to launch a new variant of its luxury

car S-Class in January 2014.

• Ford India is planning to launch a new hatchback in the 2014-

15, named as 'The all-new Ford Ka Concept'. Any further details

on the model are not yet known.

• Honda Cars India Ltd. announced to launch three new models

including one MPV Mobilio in 2014-15.

Maruti

Maruti Suzuki India Ltd

Key indicators

Background

• Maruti Suzuki India Ltd (MSIL) is India's largest passenger

vehicles manufacturer.

• As of March 2013, MSIL's manufacturing facilities are located at

Gurgaon and Manesar with total annual capacity of 1.5 million

vehicles.

• MSIL is planning to expand its capacity to 1.75 million vehicles in

2013-14, owing to expansion at its Manesar plant.

• The company is also expected to commission its diesel engine

plant with initial capacity to produce 150,000 units per annum.

Dealer Network

• As of March 2013, MSIL had a strong network of around 1,204

sales outlets spread across 874 cities and 2,965 authorised service

stations spread over 1,423 cities.

Key models

Domestic sales and exports

• Maruti's domestic sales increased modestly by 4.4 per cent y-o-y

in 2012-13, mainly due to the slowdown in the passenger vehicles

segment.

• In 2012-13, the passenger vehicles segment was highly impacted

and grew marginally by 2 per cent y-o-y due to the weak

economic environment coupled with the high ownership cost of

vehicles, leading to poor consumer sentiments.

• Exports fell by 5.5 per cent y-o-y owing to a sharp decline in the

company's key export market - Europe.

• Over 2007-08 to 2012-13, while domestic sales increased by 8.1

per cent, exports rose robustly by 18.4 per cent.

• As of March 2013, Maruti primarily exported its passenger

vehicles to Indonesia, Thailand, Malaysia, Vietnam along with

Europe.

• Due to the economic slowdown in Europe, the company started

exploring other non-European export destinations.

• As a result, the company's share of exports to European

countries decreased to 23 per cent in 2012-13 over 38 per cent in

the previous year.

• Maruti continued to hold a dominant position in the domestic

passenger vehicle market with a share of 39 per cent in 2012 - 13.


Trend in Domestic Sales:

Trend in Exports:

Recent launches (2012 onwards)

Recent launches (2012 onwards)

Forthcoming launches

Capital expenditure

• In 2012-13, MSIL incurred a total capex of Rs 27 billion.

• A large part of this capex was to add 250,000 units of vehicle

manufacturing capacity to its Manesar plant.

• In 2013-14, the company has announced a capex of Rs 30 billion,

of which, around Rs 19 billion will be spent towards increasing

the capacity at the Manesar plant by 250,000 units, while the

balance will be spent on setting up new diesel engine capacities.

• The company had also announced a capex of Rs 60 billion to set

up capacities to manufacture about 10,00,000 units per annum in

Gujarat (greenfield expansion) in 2012-13.

• The company has signed an agreement with the Gujarat state

government under which, the government will allocate 500 acres

for the same.

• The company is also planning to make an investment of Rs 10 billion to

build a new research and development centre at Rohtak, which is

expected to be commissioned in two phases by 2016.

Capital expenditure

Merger with Suzuki Powertrain India Limited (SPIL)

• Under a scheme of amalgamation approved by the high court, Delhi,

MSIL amalgamated with itself, Suzuki Powertrain India Limited (SPIL), a

supplier to it of diesel engines and transmissions.

• SPIL, which was 70 per cent owned by Suzuki Motor Corporation, Japan

and 30 per cent by MSIL, was amalgamated with the company through a

share swap.

• The swap ratio was fixed at 1:70 based on the terms of the scheme.

• With the amalgamation the company brought entire diesel engine

capacity under single management control in order to enable the

company strengthen its business, including sourcing, localisation

and production planning.

• It will also lead to manufacturing flexibility and cost reduction.

Merger with Suzuki Powertrain India Limited (SPIL)

Hyundai

Hyundai Motors India Limited (HMIL)

Key indicators

Plant locations and capacity

• HMIL has two plants at Sriperumbudur, Chennai and a research

and development (R&D) centre at Hyderabad.

• As on March 31, 2013, its total installed capacity stood at 670,000

units. The company has 350 dealers across 800 service points.

Recent models and expected launches

• In March 2012, the company launched its new sedan , with a 2.4 litre GDi

petrol engine and a 6-speed transmission Sonata system.

• The model was priced at Rs 18.53-20.61 lakh (ex-showroom Delhi).

• The same month, HMIL launched an upgraded version of its

hatchback i20 , named as iGen i20 , at a price of Rs 4.73 lakh (base

petrol variant) and Rs 5.96 lakh (base diesel variant).

• The iGen i20 is available in 12 variants and sports a more powerful (84 PS)

1.2-litre Kappa petrol engine (or a 1.4 U2 CRDi diesel engine).

• In August 2012, HMIL launched a sedan Elantra .

• It is powered by a 1,797cc petrol/ or a 1,582cc diesel engine, priced

between Rs 12.51-14.24 lakh (ex-showroom Delhi) and Rs 12.91-

15.85 lakh, (ex-showroom Delhi) respectively.

• The four-cylinder petrol engine produces 149.5PS @6,500 rpm and

a 181Nm of torque @ 4700 rpm.

• The diesel engine produces 128PS @ 4000 rpm at 265Nm of torque

between 1,900-2,750 rpm.

Recent models and expected launches

Key models

• In March 2013, HMIL launched a special edition of the , named ,

priced between Rs. 4.24 lakh-4.57 i10 i Tech lakh (ex-showroom

Delhi).

• The model is available with engine options of 1.1 litre and 1.2 litre.

• In 2013-14, HMIL plans to launch a diesel variant of the i-10 .

• The company also plans to launch a new small car code-named BA

in the second quarter of 2013-14.

• The new car is expected to have a 1.2-litre petrol engine (1.1-litre

diesel engine in the variant) and will compete directly with

Maruti's Swift.

• In 2014-15, HMIL plans to launch four models, including a

compact sports utility vehicle (SUV), a six-seater multi-purpose

vehicle, with the HexaSpace concept.

Key models

• Also expected are a sub-4 metre sedan and a compact car which will

be positioned between i-10 and i-20 .

• All the above models will be jointly developed with the company's

Korean R&D team.

Key models


• The company's domestic sales remained flat y-o-y in 2012-13

owing to weak demand.

• However, exports grew by 9 per cent y-o-y, after having declined

consecutively over 2010-11 and 2011-12.

• Over the past five years (2007-08 to 2012-13), however, domestic

sales as well as exports increased at a robust CAGR of 12 per cent.

• As of March 2013, HMIL is exporting six models: Santro, i10, i20,

Accent, Eon and Vernato to 120 countries across the European

Union (EU), Africa, Middle East, Latin America, Asia and

Australia.

• It has been the India's leading exporter of passenger vehicles for

a decade.

• The company has a domestic market share of 14.3 per cent as on

March 31, 2013.


Trend in domestic sales and exports

Capital expenditure

• In 2012-13, HMIL invested $300 million (Rs 1.6 billion) in a new

diesel-gasoline flexible engine plant, which has a capacity to

manufacture 300,000 units.

• It is expected that the plant will produce 1.1-litre, 1.4-litre and 1.6-

litre engines, which will be used in SUV and MUV models.

• The parent company, Hyundai Motor Company has invested Rs

1.84 billion to set up a 200,000 square feet R&D facility in

Hyderabad, through its fully-owned subsidiary Hyundai Motor

India Engineering.

Key developments

• In May 2013, HMIL stopped the production of its sedan , as

sales declined due to non-availability Accent of diesel version

and rising competition.

• HMIL hiked prices of all models (by Rs 4,201-20,878) with

effect from February 2013.

Mahindra

Mahindra & Mahindra Ltd (M&M)Key indicators

Background

• Mahindra & Mahindra is the largest manufacturer of utility

vehicles (UVs) and tractors in India.

• It also ranks second in the commercial vehicles segment, after

Tata Motors.

• The company has its major manufacturing units at Nashik

(Maharashtra), Kandivali (Mumbai, Maharashtra) and Chakan

(Pune, Maharashtra).

• As on March 31, 2013, the installed capacity at the plant stood at

400,000 units.

• The company had a wide dealership network of 1,300 dealers

across India for all its categories of vehicles, as on March 31, 2013.

• In March 2011, M&M acquired 70 per cent stake in Ssangyong

Motor Company (SMC).

• SMC has approved a total investment of around 500 billion

won till date, since its acquisition.

• M&M is developing three new engine platforms with SMC

which are expected to be launched over the next 2 years.

• In October 2012, M&M launched its first SUV Rexton with

SMC, priced at Rs 17.67 lakhs(ex-showroom Delhi).

• Rexton is available in two variants RX5 and RX7, only in diesel

engines.

Background

Key models

Domestic sales and Exports

• M&M's domestic sales increased by 26.5 per cent y-o-y in 2012-

13, led by strong demand for UVs due to new model launches

and increased preference for diesel vehicles.

• Exports also grew by a strong 44 per cent y-o-y, after declining in

2011-12, since the company started shipping new models.

• Over 2007-08 to 2012-13, domestic sales and exports increased at

a robust CAGR of 19.1 per cent and 11.8 per cent, respectively.

• As of March 2013, M&M primarily exported its utility vehicles to

Bangladesh, Nepal, Sri Lanka, South Africa, Europe and Latin

America, thereby making India, its major export hub.

• The company also had a strong domestic market share of 37.3

per cent in Uvs in 2012-13.

Domestic sales Growth

Exports Growth

Recent Launches (From 2012 onwards)

Forthcoming Launches

Capital expenditure

• In September 2013, M&M announced investments of Rs 40 billion

for setting up its new plant in India.

• The location for the same will be confirmed by the end of 2013-14.

• Besides this, the company also announced a capital expenditure

plan of Rs 100 billion over the next 3 years, out of which, Rs 75

billion will be used for the automobile and farm equipment

segments and the remaining Rs 25 billion will be used to launch

new models and expand capacity.

Tata motors

Tata Motors

Key indicatorsPlant locations and capacity:

• Tata Motors has three plants in India at Pune (Maharashtra),

Pantnagar (Uttarakhand) and Sanand (Gujarat).

• The company also has research and development (R&D) centres in

Pune, Jamshedpur, Lucknow and Dharwad.

• As on March 31, 2013, the total combined installed capacity of the

Company stood at 970,000 units across vehicle segments.

Dealership network:

• The company has a wide dealership network of 800 dealers

across 500 locations in India, as of March 31, 2013.

• These dealerships are across all categories of vehicles.

Key models


• The company's domestic passenger vehicle sales (volumes)

dropped by 15.1 per cent (y-o-y) in 2012-13, mainly due to a sharp

fall of 31.9 per cent (y-o-y) in passenger car segment.

• Decline was led by its inability to launch models at a faster pace.

• Sales of company's passenger cars fell significantly with sales of

Nano declining by 27.7 per cent, while that of Indica falling by 7.1

per cent.

• The company's UV business in 2012-13, however, grew robustly by

23.1 per cent (y-o-y) due to increased preference for diesel

vehicles and faster growth in rural areas.

• Over 2007-08 to 2012-13, domestic sales increased at a CAGR of 5.1

per cent.

• The company has been able to maintain its position among the

top three players in the domestic passenger vehicle industry in

2012-13, although its market share fell to 11.8 per cent from 14.7

per cent in 2007-08.

• In 2012-13, the company's passenger vehicle exports fell by 14.1

per cent (y-o-y), owing to economic and political upheavals in its

key export market.

• As of March 2013, the company exports its passenger vehicles to

several countries in Europe, Africa, the Middle East, South East

Asia and South Asia.

• Over 2007-08 to 2012-13, the company's share in India's total

passenger vehicle exports dropped sharply from 6.8 per cent in

2007-08 to 1.6 per cent in 2012-13.


Capital expenditure plans

• In 2013-14, the Company announced a total capex of Rs. 30 billion,

out of which Rs. 16 billion will be invested in product development

for the passenger vehicles division, while the same for commercial

vehicles will be Rs. 14 billion.



Forthcoming launches

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Cars and SUVs