Sunday, 5 May 2013

Query Solved - Forecast for Indian Passenger Vehicle Industry for year 2013-14

Apart from keeping all our followers up to date of Automobile Industry, we thought it would be a good idea, if we share the intricacies of why things happen and what would happen in next year with all our Wheel-O-Maniacs. As this was a topic of interest shown to us by our reader Tanuj Mangla, we got our team worked on it and hope this would provide complete insight about Indian Passenger vehicle industry.

Earlier, upon a query, infact by a lot of Wheel-O-Maniacs,  - Which vehicle should I buy - Petrol or Diesel, we got our heads brainstormed and came back with detailed analysis (Could be viewed here).  Our team of automobile enthusiasts is always ready with their tools to analyze and show you the results. So, in case you want any topic of your interest to be worked upon by our professionals, do not hesitate and just contact us here.  

Background - The Indian Automobile Industry after registering a double digit growth figure year after year since 1995 except for years 1998, 1999, 2001 where the Indian Industry attained negative growth figures. But, due to low volumes, the Industry was never ever recognized by any of countries abroad and hence domestic consumption was only source of growth. Though, many car makers like Honda, Hyundai, Mercedes and many other started their operations in late 90's or early 2000's but due to lack of recognition the market was not able to pickup. It was during the global recession in 2008-09 wherein almost all countries registered double digit negative figures and some of those have still not been able to recover fully from the global recession. India, registered -2% growth during recession but gained significantly thereafter, infact registered 26% growth consecutively for next two years. This was time when lot of global suppliers starting investing and expanding their operations in India and many of them even announced to make Indian as their global export hub. Indian came into limelight !

The below graph shows the Indian Passenger vehicle growth since year 1995-96 till date.

Story now - The country's unstable economics and highly unstable political behaviour is making it difficult for the Industry to achieve double digit growth figures, as expected by almost all big investors and global manufacturers. Some of these includes -
  • No clarity on fuel policy - Uncertainity of long term Diesel prices and high Petrol prices at present are leaving car buyers with option of deferring (extending) their purchase.
  • Uncertain policies - With reference to introduction of Excise duty on SUV's, the only booming sector in last year. There should have been some incentive given or atleast should have been left like this.
  • Interest Rate act as a deterrant - The Interest rates recently have come down a little bit but still remains high and acts as a deterrant for car buyers.
  • Stagnant or slowing down of sector as whole - The manufacturing sector which accounts for 75% of overall IIP figures has grown by an average 1% against a double digit growth years before. 
  • Currency fluctutaions - European economy due to low growth has led to low exports there. Depreciating INR against USD has even made it difficult for Indian manufacturers to export it to American countries and thereby making it difficult for overall export market. 
The Industry registered a slow 2-3% growth in last year mainly due to new launches and backed by providing huge discounts to push sales. 

Year ahead - The year ahead does not seems to be a promising one. We predict a modest 3.7% growth next year, assuming the conditions does not deteriorate further with minimal changes of situations imporving further. With the past experience coming as the decisions if any, takes time to get implemented, we do not foresee any major siginificant positive changes happening over the year. The only growth would coming from Honda Cars India with Amaze launch, Ford India with EcoSport launch and Maruti Suzuki with growth coming from various model refreshes mainly on account of A-Star facelift, which could garner additional volumes during the year. The manufacturer wise details is also provided with their plans in next year and reasons for their growth / de-growth. 

Honda Cars India - The Japanese car maker has some serious plans for the Indian market. Seems like they have taken inspiration from their counterpart, Suzuki, which is behind them in overall numbers in Japan. Ford India, the carmaker has plans to sell 200,000 volumes in year 2017 and have already started working upon capacity improvement at its Tapukara facility. With Investment of INR 2,500 Crore, they intend to take overall vehicle capacity at 2.4 Lac soon. Immediate growth could be provided by Amaze and next year could be taken further by City Diesel and further by Brio based MPV. Read here for more details. 

Ford India - The American carmaker is known for the driving dynamics of their cars and have launched some of the fantastic cars in India with Fiesta and Figo being two of them. Ford's EcoSport to be launched next month will bring some relief to industry with lot of relief for American carmaker who is currently dependent on Figo, this being bread and butter model for Ford India. 

Maruti Suzuki - One carmaker who has such a solid foundation that all others have tried but not able to bring even a crack in it. Backed by strong customer reputation, support services, after sales service and acceptability have led them remain the market leader even in tough times. They again have plans to launch some of great models with SX4 Crossover and XA-Aplha but for the current year we will have to only -restrict to some of the facelifts like A-Star and more. Backed by exports, there should be 3% growth in next year for market leader.

The below graph will show the expected growth by various manufacturers in year 2013-14 when compared to year 2012-13.

Hyundai Motors India - The Korean manufacturer is already running at its full capacity in India and will not be able to provide significant growth to Hyundai globally but achievements this year could be launch of new small diesel car, to be positioned between i10 and i20 - also are rumours that it could be called Brilliant.

Nissan Motors - The stroy for the duo (Renault & Nissan) has been great since the time they stepped in India with clear focus to achieve economies of scale and export oriented production. The carmaker would not be doing very good in Indian market but is exporting almost 2.5 times what it is selling in India. or Indian market they have planned a "Duster" based SUV during October 2013 and should provide some relief to industry. 

For all other manufacturers, with products launching end 2014 or in 2015, could provide them a boost and hence will show minimal growth during year 2013-14. Contact us for any queries relating to the above.


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