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AutomotiveMARKET & OPPORTUNITIES

AutomotiveMARKET & OPPORTUNITIESCONTENTSIndian Automotive Industry Market Size and Growth2Overview of the Two Wheeler Market4Overview of the Passenger Vehicles Market9Overview of the Commercial Vehicles Market12Overview of the Three Wheeler Market15Indian Partnerships with Foreign Firms17Automotive Clusters in India18India’s Automotive Policy and Status of Regulations19Growth Potential of the Indian Automotive Industry22A report by IMaCS for IBEF

MARKET & OPPORTUNITIESIndian Automotive Industry –Market Size and GrowthIndian Automotive Industry – Development and GrowthPre 19831983-1993 Suzuki, Japan and GOI joint venture to formMaruti Udyog Joint ventures with companies in commercialvehicles and components Closed market Growth of market limited by supply Outdated modelsPlayers Hindustan Motors Premier Telco Ashok Leyland Mahindra & MahindraPlayers Maruti Udyog Hindustan Motors Premier Telco Ashok Leyland Mahindra & MahindraThe Indian automotive industry has the potential to emergeas one of the largest in the world. India ranks number twoglobally in the two-wheeler segment next only to China. Itranks 11th in car production and 13th in commercial vehicleproduction globally. With increasing industrial productionand growing spending power of the Indian middle classhouseholds, the country is expected to make it to the topfive markets in the cars and commercial vehicles segmentby 2020.Automotive Sales (Domestic and Exports %5.41200202Source: Indian Automotive Sector46million units810121993-2007 Delicencing of the sector in 1993 Global major OEMs start assembly in India(GM, Ford, Honda, Hyundai, etc.) Imports allowed from April 2001; alignmentof duty on components and parts to ASEANlevels Implementation of VATIn the year 2006-07, sales of the the Indian automotiveindustry crossed the historic landmark of 10 million units.Sales (domestic as well as exports) of the industry had grownfrom 5.51 million units in 2001-02 to 11.12 million units in2006-07, at an impressive Compound Annual Growth Rate(CAGR) of 15.5 per cent. This extraordinary growth hadbeen driven by a buoyant economy, increasing purchasingpower of the Indian middle class, new product launches andattractive finance schemes from automobile manufacturersand financial institutions. Of the total sales, roughly10 per cent was contributed by exports to various countries.In terms of volume, the two wheelers segment withsales of 8.48 million units in 2006-07 had the highestshare of more than 76 per cent in the industry, followedby passenger vehicles, three wheelers and commercialvehicles. The maximum growth, however, had occured inthe commercial vehicles segment, which grew at a CAGR of26.6 per cent in the last five years to reach a sales figure ofroughly 518,000 units in 2006-07. The next highest growthwas witnessed in the three wheelers segment, which grewto roughly 548,000 units. The Indian automotive industryis highly competitive with a number of global and Indiancompanies present in the market. The foreign companiesare present in India either through joint ventures with local

Automoti v eSegment-wise Sales, Share and Growth in theIndian Automotive IndustryTwo WheelersSales in2006-07Share inTotal SalesCAGR2002-078,476,68676.2%Leading Players and Segments in which they OperateManufacturerSegmentsAshok LeylandLCVs, M&HCVs, Buses14.5%Asian Motor WorksM&HCVsThree wheelersPassenger Cars1,578,17614.2%16.7%Atul AutoThree Wheelers547,8054.9%20.5%Bajaj AutoTwo and Three Wheelers26.7%BMW IndiaCars and MUVsDaimler Chrysler IndiaCarsEicher MotorsLCVs, M&HCVs, BusesElectrotherm IndiaElectric Two WheelersFiat IndiaCarsForce MotorsThree Wheelers, MUVs and LCVsFord IndiaCars and MUVsGeneral Motors IndiaCars & MUVsHero Honda MotorsTwo WheelersHindustan MotorsCars, MUVs and LCVsHondaTwo Wheelers, Cars and MUVsHyundai MotorsCars and MUVsKinetic MotorTwo WheelersMahindra & MahindraThree Wheelers, Cars, MUVs, LCVsMajestic AutoThree WheelersMaruti SuzukiCars, MUVsPiaggioThree Wheelers, LCVsReva Electric Car Co.Electric CarsRoyal Enfield MotorsTwo WheelersScooters IndiaThree WheelersSkoda Auto IndiaCarsSuzuki MotorcyclesTwo WheelersSwaraj Mazda Ltd.LCVs, M&HCVSs, BusesTata MotorsCars, MUVs, LCVs, M&HCVs, BusesTatra Vectra MotorsM&HCVsToyota KirloskarCars, MUVsTVS Motor Co.Two WheelersVolvo IndiaM&HCVs, BusesYamaha Motor IndiaTwo WheelersCommercialVehicles517,6484.7%Source: Society of Indian Automobile Manufacturers (SIAM)partners wholly/partially owned technology tie-ups or assubsidiary companies of their parent companies.Most players are present in more than one segment.The industry is also witnessing diversification by playersinto other segments. The passenger cars and commercialvehicles industries in particular are poised to witness theentry of new players.LCV: Light Commercial VehicleMUV: Multi Utility VehicleM&HCV: Medium and Heavy Commercial VehicleSource: SIAM, Company websites

MARKET & OPPORTUNITIESOverview of the Two Wheeler MarketMarket size and segment-wise growthBreakup of the Industry by SegmentThe total sales of the Indian two wheeler industry had grownat a CAGR of 14.5 per cent between 2001-02 and 2006-07.Of the total sales of 8.48 million units in 2006-07, domesticsales were 7.86 million units. There are four sub-segmentsin the two wheelers market in India, which are as follows: S cooter/Scooterette: Two wheelers having wheel size lessthan or equal to 12 inches M otorcycles: Two wheelers having wheel size more than12 inches M opeds: Two wheelers having engine capacity less than75 cc with fixed transmission and wheel size more than12 inches E lectric two wheelers: These are electrically driven bikesDomestic Two Wheeler .5%4.8120024.2001Source: SIAM, IMaCS Analysis2345million units6785%12%83%n Motorcyclesn Scootersn MopedsMotorcycles constitute nearly 84 per cent of the twowheeler market. The motorcycles market had witnessedthe fastest growth rate in the two wheeler segment.Domestic sales as well as exports achieved a CAGR of 19.2per cent. The cost of ownership and operational economyare important purchase criteria. Entry level bikes (thosehaving engine power below 125 cc and priced betweenUS 850-1100) have the maximum share. The premium bikesegment (having engine power above 125 cc and pricebetween US 1,200-2,000) has been growing at a rapid pace.This demand is an indication of the increasing affluencelevels of the middle class Indians. Though the scootersegment as a whole has been shrinking, the scooterettesegment, powered by 75-125 cc engines, has been growingsignificantly.While the A1 segment of scooters, comprising of gearedscooters, has almost become negligible, the A2 segment ofauto transmission scooters with engine capacity 75-125 cchas grown at a CAGR of 32.9 per cent. The A3 segment hasalso witnessed a decline and comprises of only 1 per centof the market as compared to its share of 12 per cent five

Automoti v eSegment-wise Analysis of Indian Two Wheeler MarketSegmentDescriptionShare in 2001-02Share in 2006-07CAGRA1Scooter with enginecapacity less than 75 cc5%0%-33.9%A2Scooter with enginecapacity between75-125 cc (Scooterette)5%10%32.9%A3Scooter with enginecapacity between125-250 cc12%1%-27.7%B2Motorcycle with enginecapacity between75-125 cc62%66%14.9%B3Motorcycle with enginecapacity between125-250 cc5%17%44.8%B4Motorcycle with enginecapacity above 250 cc1%1%5.7%C1Mopeds10%5%-2.7%Source: SIAMyears back. The key reason for this trend is the increasedconsumer preference for stylish features as well as the fuelefficiency of the A2 segment.The B2 and B3 segments had witnessed impressivegrowth rates at a CAGR of 14.9 per cent and 44.8 per centrespectively between the years 2001-02 and 2006-07. Thehigh powered premium B3 segment had in particular seenits share rise from only 5 per cent in 2001-02 to 17 per centin 2006-07. The sales in this segment have been driven byyoung consumers in the age group of 18-25 years, for whomperformance and style are important criteria for selection ascompared to fuel efficiency. The B1 segment in motorcycles(having engine capacity less than 75 cc) has become almostnegligible in the market, an indicator of the preference ofIndians towards optimally powered vehicles.Another interesting aspect of the two wheeler marketin India is the fact that the demand for the replacementpurchase has been growing. In 2003, first time buyers oftwo wheelers constituted 74 per cent of total sales, whereasthose purchasing a two wheeler as a replacement of anexisting two wheeler were only 26 per cent. While in 2006,the replacement market had grown considerably to 36 percent of the overall market.Increasingly two wheeler owners are upgrading tocars, a trend that is more prominent in North India. In theSouth and West India, the preference of buyers is towardsupgrading to high powered motorcycles.Market shares and brands of key playersin the two wheeler marketMarket Share of Key Players in 2006-07Hero Honda Motors42%Bajaj Auto Ltd.27%TVS Motor Co.19%HMSIL9%Others3%Source: SIAM, IMaCS AnalysisIn the Indian two wheeler market, competition is intensewith around 10 players competing for the share in theindustry. These players include global giants like Honda,Suzuki and Yamaha as well as Indian players like Bajaj andTVS. The market leader in the domestic two wheeler industryis Hero Honda Motors, with a 42 per cent market share.It is the largest two wheeler manufacturer in the world andis closely followed by Bajaj Auto, which has a 27 per centmarket share. TVS Motor is the third largest two wheelermanufacturer in the country, it has also established amanufacturing facility in Indonesia. Honda Motors ispresent in India as Honda Motorcycles and Scooters IndiaLimited (HMSIL), a 100 per cent subsidiary, in addition toits joint venture, Hero Honda. Another international player,Suzuki, has recently entered the Indian market throughits direct subsidiary. The industry is characterised byfrequent product launches, with over 20 models launchedin 2006-07.

MARKET & OPPORTUNITIES Key Brands in the Two Wheeler MarketSegmentBrand (Manufacturer)A1TVS Scooty (TVS Motors)A2Pleasure (Hero Honda), Kristal (Bajaj Auto), Honda Activa, Duo (HMSIL), Nova (Kinetic Motor Co.)A3Honda Eterno (HMSIL), Blaze (Kinetic Motor Co.)B2Splendour, CDDawn/Delux, Splendour, Achiever (Hero Honda), CT100, Platina, Discover (Bajaj Auto), Shine (HMSIL), Stryker(Kinetic Motor Co.), Zeus/Heat (Suzuki Motorcycles), Super XL, Victor, Centra, Star (TVS Motors), G5, Crux, Alba (Yamaha)B3Glamour, Karizma, CBZ (Hero Honda), Bajaj Pulsar, Avenger (Bajaj Auto), Unicorn (HMSIL), Comet, Aquila (Kinetic Motor Co.), Fiero,Apache (TVS Motor), Gladiator (Yamaha Motor)B4Bullet, Machismo, Thunderbird (Royal Enfield Motors)C1Luna, V2, King (Kinetic Motor Co.)DYO Smart, YO Spin, YO teen (Electrotherm India)Source: SIAMThe key brands of leading players in various subsegments are shown in the table overleafCapacities of Major Players in the Two Wheeler MarketPlayerCapacity (in thousand units)Hero Honda Motors4,400Bajaj Auto Ltd.4,050TVS Motor Co.1,900Yamaha Motor India500Suzuki Motorcycles India100Kinetic Motor Co.300Royal Enfield Motors50Electrotherm India Ltd.288Honda (HMSIL)750Exports of Two Wheelers from IndiaTwo Wheeler Exports from 104.20100Source: SIAM, IMaCS Analysis200300400‘000 units50046%TVS Motor Company16%Hero Honda Motors Ltd.15%Yamaha India10%Others13%The exports of two wheelers from India grew from104,200 units in 2001-02 to over 619,200 units in2006-07, at a CAGR of 42.8 per cent. Majority of the exportsare made to neighbouring countries like Bangladesh,Sri Lanka, Bhutan and Nepal. Motorcycles constituted88 per cent of the total two wheeler exports. Motorcycleexports grew at a CAGR of 57.2 per cent, from 2001-02 to2006-07. Most of the bikes exported were those with enginecapacity below 125 cc,indicating consumer preference for Indian made economybikes in these countries. While exports of mopeds grew ata CAGR of 14.6 per cent, exports of scooters grew only at4.7 per cent over the five year period.Bajaj Auto is the market leader in exports with 46 percent share. It is followed by other leading players like HeroHonda Motors, TVS Motor Company and Yamaha India,amongst others.Growth Prospects and Key Drivers of the Indian TwoWheelers Industry179.72002Bajaj AutoSource :SIAM, IMaCS AnalysisSource: Annual Reports of companies, News clippings2006Market Share of Key Players in Exports 2006-07600700The growth witnessed by the Indian two wheeler industryindicates the growing demand for low cost personaltransportation solutions amongst the 300 million Indianmiddle class consumers. Despite this spectacular growth

Automoti v erate, the two wheeler penetration (number of two wheelersper 1000 inhabitants) in India remains lower than otherAsian countries. This fact provides an opportunity forcontinued growth in the market. India has the lowestpenetration of two wheelers as compared to countries likeTaiwan, Thailand, Malaysia, Vietnam, Indonesia and China.In the present scenario, growth in the two wheelerindustry will be driven by several factors:Comparison of Two Wheeler Penetration(per thousand 140Indonesia90China52India37stagnated in the past. This has been part of the marketingstrategy adopted by the manufacturers to gain volume,as well as conscious efforts adopted to bring down costs.The operating expenses of leading manufacturers havedeclined by around 15 per cent in the last five years. Withgreater avenues of financing, the customer’s capacity toown a two wheeler has improved.Rapid Product Introduction and ShorterProduct Life CycleThe last five years have witnessed a sharp increase in newproduct launches in the two-wheeler industry. It is estimatedthat close to 50 new products have been launched bymanufacturers during this period, filling up all price pointsand targeted at various consumer segments.Inadequate Public Transport Systemsin most Urban AreasRise in India’s Young Working PopulationWith the rising levels of per capita income of people, theIndian two wheeler market offers a huge potential forgrowth. This growth is relevant in the light of the fact that70 per cent of India’s population is below the age of 35years and 150 million people will be added to the workingpopulation in the next five years. The number of women inthe urban work force is also increasing, this will lead to thegrowth of gearless scooters.The economic boom witnessed in the country and theincreased migration to urban areas have increased thetraffic congestion in Indian cities and worsened the existinginfrastructure bottlenecks. Inadequate urban planninghas meant that transport systems have not kept pace withthe economic boom and the growing urban population.This has increased the dependence on personal modes oftransport and the two wheelers market has benefited fromthis infrastructure gap.Rise of India’s Rural Economy and Growth in MiddleIncome HouseholdsChallenges faced by the industryThe growth prospects of the Indian rural economy offer asignificant opportunity for the motorcycle industry in India.The penetration of motorcycles amongst rural householdswith income levels greater than US 2,200 per annum hasalready increased to over 50 per cent. The current targetsegment for two wheelers, i.e, households belonging to theincome category of US 2,200–12,000 is expected to growat a CAGR of 10 per cent.Greater Affordability of VehiclesThe growth in two-wheeler sales in India has been drivenby an increase in affordability of these vehicles. An analysisof the price trends indicates that prices have more or lessDespite the high growth achieved in the past and the highpotential in the future, the two-wheelers market facessome challenges.Rising Customer ExpectationsThe growth witnessed by the Indian two wheelerindustry has attracted a number of new entrants to themarket and it is expected that the Indian industry willbecome more competitive in the future. The plethora ofproducts introduced in the past has also raised customerexpectations with respect to reliability, styling, performanceand economy.

MARKET & OPPORTUNITIESEnvironmental and Safety ConcernsCreation of Distribution InfrastructureThe increasing demand for two wheelers will need to bemanaged to address issues relating to overcrowding ofroads. Another problem is the insufficient infrastructurefor inspection to ensure adherence to emission norms. Asthe industry grows, it is important to regulate the sale ofused two wheelers in a more organised manner for whicha mechanism needs to be evolved. Unregulated sale of twowheelers, especially in the rural areas, are likely to createissues related to emissions and safety of vehicles.Leading companies need to ensure that on one hand theybuild adequate infrastructure in terms of dealerships andservicing stations in the urban areas and on the otherensure that their distribution infrastructure also reachesthe rural areas.

Automoti v eOverview of thePassenger Vehicles MarketMarket Size and Segment-wise GrowthThe total sales of the Indian passenger vehicles industryhas grown to reach 1.58 million units in 2006-07, of whichdomestic sales were 1.38 million units and the remainingglobal players into India has made the Indian car industryincreasingly competitive, as the consumers enjoy the luxuryof choice among segments. The increasing affluence levelBreakup of the Industry by Segment for 2007Domestic Passenger Vehicles Industry 00 units1,2001,400n Passenger carsn SUVs/MPVsSource: SIAM, IMaCS Analysiswere exports. Domestic sales grew at a CAGR of 15.4per cent between 2001-02 and 2006-07. The entry ofof the Indian middle class has also affected the industry.Passenger cars, which constitute 78 per cent of the marketSegment-wise Analysis of Passenger Vehicle MarketSegmentDescriptionShare in 2001-02Share in 2006-07CAGRAMini cars, upto 3400 mm length28.0%7.00%-11.0%BCompact cars, between3401-4000 mm length54.0%70.00%22.0%CMid size cars between 4001-4500mm length17.0%18.00%18.6%DExecutive cars between4501 - 4700 mm length0.2%3.80%112.0%EPremium cars between4701 - 5000 mm length0.9%0.55%6.0%FLuxury cars - above 5001 mmlength0.0%0.02%NASource: SIAM

10MARKET & OPPORTUNITIESgrew at a CAGR of 16.2 per cent. Utility vehicles andMulti Purpose Vehicles (MPVs), having a share of 16 per centand 6 per cent, grew at a CAGR of 16.1 per cent and 6.1 percent respectively.It is significant that the mini car segment, which hadtriggered the growth of the Indian car industry in the past,has been shrinking in size. Its share in the total car markethas fallen from 28 per cent in 2001-02 to 7 per cent in2006-07. On the other hand, the compact car segment hasgrown at a CAGR of 22 per cent, to garner 70 per cent of theshare of the car market. The major reason for this trend isthat compact cars have been priced marginally above themini cars by most manufacturers. Also this segment hasseen a number of new product launches.The Indian market, however, is once again witnessinghigh levels of activity in the mini car segment with severalplayers are announcing their plans to enter this segmentsince Tata Motors’ announcement of its US 2,500 car. Inthe future the mini car segment is expected to be revivedby the launch of low cost cars by other players as well. Theexecutive segment (D) has grown at an impressive CAGRof 112 per cent between 2001-02 and 2006-07, a clearindication of the increasing disposable incomes of Indianbusinessmen and senior executives.An interesting aspect of the Indian passenger vehiclesmarket is the fact that around 40 per cent of the marketcomprises of consumers, who already own one car and arebuying their second car. Those replacing their current carcomprise 28 per cent of the market. Buyers, who replacetheir cars, usually upgrade to a higher segment.Indian consumers are value conscious and cost ofownership is more important as compared to image,performance and power. This is supported by the factthat 80 per cent of the cars sold in India are priced belowUS 12,000. More than 25 per cent of the cars on Indianroads are chauffeur driven, and this factor makes rearpassenger comfort a critical influence in purchasingdecisions, especially in the mid sized cars.The Indian passenger vehicle industry is undergoingsignificant dispersion of the market. Today the top 20 citiesaccount for around 50 per cent of the cars sold. Till a fewyears back, the metros alone accounted for 60-70 per centof the passenger vehicles sold.Market Shares of Key Players in the PassengerVehicles MarketThe market for passenger vehicles in India is highlycompetitive with more than a dozen manufacturers in theindustry. Most of the leading global players have a presencein India in the form of joint ventures or subsidiaries.Market Shares of Key Players in 2006-07Maruti Udyog Ltd.46%Tata Motors Ltd.16%Hyundai Motor India Ltd.14%Mahindra & Mahindra7%Toyota4%Others13%Source: SIAM, IMaCS AnalysisThe industry leader is Maruti Udyog with 46 per centmarket share, followed by Tata Motors and HyundaiMotors. India is considered as a strategic marketby Suzuki, Japan, a co-promoter of Maruti Udyog.Tata Motors, the largest automotive player in India islaunching the US 2,500 car. Hyundai Motors, the thirdlargest passenger vehicle manufacturer in India, hasestablished its global manufacturing base for small cars inIndia and is a leading exporter of small cars from the country.Mahindra & Mahindra is amongst the largest players in theCapacities of Major Players in Indian Passenger Vehicles SegmentPlayerCapacity (in thousand units)Maruti Suzuki700Tata Motors290Hyundai Motors400Mahindra & Mahindra170Toyota Kirloskar60BMW India1.7Honda Motors50General Motors India85Ford India100Hindustan Motors35Skoda Auto India17Force Motors24DaimlerChrysler India2.5Source: Annual Reports of companies, News clippingsMulti Utility Vehicles (MUV) segment. It has tied up withRenault for manufacturing and marketing of ‘Logan’ brand

Automoti v eof cars in India. Other major players are Toyota, HondaMotors and Ford, all of these are operating in the premiumcars segment.Key Brands in Passenger Vehicles MarketSegmentKey Brands and Companies to which they BelongAMaruti 800 (Maruti Suzuki)BAlto, Wagon-R, Swift (Maruti Suzuki), Indica (TataMotors), Santro, Getz (Hyundai Motors), Palio (FiatIndia)CEsteem, SX4, (Maruti Suzuki), Indigo (Tata Motors),Verna, Elantra (Hyundai Motors), Honda City (HondaMotors), Astra, Aveo, Optra (General Motors), Logan(M&M), Icon, Fiesta (Ford India), Cedia (HindustanMotors), Petra (Fiat India)DCivic (Honda), Opel Vectra (General Motors), Contessa(Hindustan Motors),Skoda Octavia (Skoda Auto),Mercedes C-class (Daimler Chrysler India)ESonata (Hyundai Motors), Accord (Honda), Corolla,Camry (Toyota Kirloskar), Mondeo (Ford India), Superb(Skoda Auto), Mercedes E-class (DaimlerChryslerIndia), 5 series (BMW India)FMercedes S-class, Maybach (DaimlerChrysler India),7 Series(BMW India)SUVGrand Vitara (Maruti Suzuki),Safari (Tata Motors),Tucsan (Hyundai Motors), CRV (Honda),Scorpio (M&M Ltd), cFusion, Endeavour (Ford India),Pajero (Hindustan Motors), Challenger, Toofan (ForceMotors)MUVOmni, Versa (Maruti Suzuki), Sumo, Indigo Marina(Tata Motors), Innova (Toyota Kirloskar), Tavera(General Motors India), Bolero (M&M)Source: SIAMExports of Passenger Vehicles from IndiaThe exports of Indian cars has grown at a CAGR of 30 percent in the last five years and crossed 198 thousand units.Passenger Vehicles Exports from 20032002CAGR30%53.1702550Source: SIAM, IMaCS Analysis75100125‘000 units150175200Hyundai Motor India has emerged as the leadingexporter of cars with 68 per cent share in the total exports.Manufacturing companies in India have gained expertiseover the years in manufacturing mini and compact cars andthereby have an advantage over other low cost countriesin these vehicle categories. In the year 2006-07, 71 per centof the Indian car exports comprised of compact cars. Thisis a clear indication that India is turning into a small carmanufacturing hub. Exports from India are made to SouthAmerica, Africa, Europe, Latin America and the Middle East.Market Share of Key Players in Exports 2006-07Hyundai Motor India Ltd.58%Maruti Udyog20%Ford India Pvt Ltd.12%Tata Motors9%Others1%Source: SIAM, IMaCS Analysis11

12MARKET & OPPORTUNITIESOverview of theCommercial Vehicle MarketMarket size and segment-wise growthThe total sales of the Indian commercial vehicles (CV)industry had grown to reach more than 518,000 units inDomestic Commercial Vehicles 03190.682002CAGR26%146.670100200300‘000 units400Source: SIAM, IMaCS AnalysisBreakup of the Industry by Segment6%36%n M & HCV Goodsn M & HCV PassengerSource: SIAM, IMaCS Analysis5%53%n LCV Goodsn LCV Passenger500the year 2006-07. Out of which domestic sales were nearly468,000 units and the remaining were exported. Domesticsales has been growing at a CAGR of 26.1 per cent in the lastfive years. The CV industry is segmented broadly into LCV,having gross vehicle weight below 7.5 tonnes, and M&HCV,having gross vehicle weight above 7.5 tonnes.The growth in the CV industry has been driven byincreased industrial production as well as the growth ininvestments made in building infrastructure in the country.While the passenger bus industry has seen moderategrowth, goods vehicles witnessed an impressive growth.The latter is dominated by multi axle vehicles. The share ofLCV is increasing rapidly.The composition of the CV industry has been changingover the period of time. In 2006-07, the total share ofthe multi axle vehicles in the CV market was 21 per centwhen compared to 8 per cent in 2001-02. The share of the3.5 tonnes pickups increased to 36 per cent from 15 per centduring the period 2001-02. This shift indicates the evolutionof a hub and spoke model, wherein multi axle trucks areused for long distance hauls and pickups are used for the lastmile logistics. The introduction of Tata Ace in the sub 1 tonnesegment has shown significant growth in the CV market.However, a shift in the market to tractor trailers is expectedto start in the near future, with improvements in the roadinfrastructure.Economics of operation is the most important purchasecriteria in the case of a CV. Other factors, which influencesales include price, service network of the manufacturer andresale value of the brand being purchased. The industry ischaracterised by a low proportion of owner driven vehicles.The large uneducated driver population makes criteria likedriver safety and comfort to be of trivial consideration.

Automoti v eSegment-wise Analysis of Indian CV MarketShare in 2001-02Share in 2006-07CAGRUpto 3.5 tonnes (Pickups)Description (by Gross Vehicle Weight)15%36%51.9%5 - 7.5 tonnes (LCV)25%9%5.1%7.5 – 12 tonnes (Intermediate CV)7%9%33.4%12 – 16 tonnes( 4X2 FF/SF)29%17%14.6%16 – 25 tonnes (Multi Axles)8%21%55.9%25 tonnes and above (Tractor Trailers)8%21%9.7%Source: SIAMMarket Shares and Brands of key Players in theCommercial Vehicles MarketTata Motors clearly leads the market in both the goodsand passenger segments of CV with a total market share of64 per cent. Ashok Leyland ranks next and has aconsiderable market share in M&HCV segment. It hasformed a joint venture to manufacture LCV with Nissan.The LCV market is dominated by Tata Motors, followed byMahindra & Mahindra. The latter a relatively new player in theCV segment, has formed a joint venture with InternationalTrucks to manufacture M&HCV trucks in India. Eicher Motors,having a 6 per cent share in the overall market, is a leadingplayer in the LCV trucks segment and has recently enteredthe M&HCV trucks segment. Other key players include SwarajMazda, present in the LCV segment and Volvo India, a leadingplayer in luxury passenger buses and heavy duty tippers. Allthe major players in the CV segment are in the process ofenhancing their capacities and launching new products.Market Shares of Key Players in 2006-07Key Brands in the CV MarketSegmentKey Brands and Companiesto which they belongLCV PassengerStag (Ashok Leyland), Skyline, Cruiser, School (EicherMotors), 709, Cityride, Ace, Magic (Tata Motors )LCV Goods11.90, 10.95, 10.90 (Eicher Motors), Prestige, Super(Swaraj Mazda), LPT709, SFC407, 207DI, Ace(Tata Motors)M&HCVPassengerViking, Cheetah, Panther (Ashok Leyland), 4923,2523 (Asian Motor Works), Globus, Starbus(Tata Motors), B7R (Volvo India)M&HCV Goods4018H, 2214H, 2516H, 1613H, 1612H, ecomet(Ashok Leyland Ltd), Jumbo 20.16, Galaxy 30.25(Eicher Motors), Sartaj (Swaraj Mazda), LPS 4018,LPT 2515 TCIC, LPT 2515 TC, LPT1613, SE 1613 (TataMotors), HEMANG (Tatra Vectra Motors), FM9, FH12(Volvo India)Source: SIAMExports of CVs from IndiaThe exports of Indian CVs have grown at a CAGR of 33.2 percent between 2001-02 and 2006-07 to reach nearly 50,000CV Exports from IndiaTata Motors Ltd.64%Ashok Leyland Ltd.16%M&M Ltd.10%Eicher Motors Ltd.6%Others4%2005Capacities of Major Players in the CV Market2004PlayerCapacity (in thousand units)Tata Motors682Ashok Leyland86Asian Motor Works10Eicher Motors30Swaraj Mazda Ltd.12Volvo India1Tatra Vectra MotorsSource: Annual Reports of companies, News 002CAGR33.2%11.870102030‘000 units4050Source: SIAM, IMaCS Analysisunits. Tata Motors accounts for more than 70 per cent of theCV exports. LCV goods carriers accounted for more than50 per cent of the overall exports. Most of the exports are13

14MARKET & OPPORTUNITIESIncreasing Access to Cheaper Financemade to Sri Lanka, the Gulf countries and Africa.M

to roughly 548,000 units. The Indian automotive industry is highly competitive with a number of global and Indian companies present in the market. The foreign companies Source: Indian Automotive Sector are present in India either through joint ventures with local Automotive Sales (Domestic and Exports ) CAGR 15.5% 2007 2002 5.41 2003 6.25 2004 .

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