The automotive industry has been on top gear as manufacturers reported robust sales in the wake of new launches. The automotive sector is maintaining its growth trend. The auto industry's growth rate is on a fast track strongly aided by the auto components segment also. The tide has turned in the favour of Indian market as some auto majors launched their vehicles in India first despite their global presence. Rising interest rates were a major deterrent to the auto sector. With their swift strategies, auto majors managed to overcome the crisis and maintained their growth rate. The two-wheeler witnessed a host of new launches.
Two-wheelers
The two-wheeler witnessed a host of new launches to beat the slump in sales. On account of low demand and scarce finance, the two-wheeler industry has been on a downtrend. The motorcycle segment has shown a decline of 14.4% which has led to 8.5% decline in the two-wheeler segment. Hero Honda has given a better performance due to its new launches and a low base last year. Bajaj Auto and TVS Motors have been hit the most. The scooter segment has grown by 18.9%. The 2-wheeler exports showed a strong growth of 24.5%.
Two-wheeler sales registered a negative growth of 8.46% during April-October 2007 over April-October 2006. Though mopeds and scooters grew by 22.35% and 19.57% respectively, motorcycles and electric two-wheelers registered a negative growth rate of 13.68% and 29.66% respectively.
Performance of two wheeler majors
Hero Honda
Despite the slowdown in the two-wheeler industry, Hero Honda's share in the domestic motorcycles market has grown upward of 50%. The company has been successful in maintaining its strong growth momentum across segments. In the premium segment, Hero Honda has more than doubled its volume and share between Jan-Sept 2007. Similarly, Hero Honda's share in the 125-cc segment has risen to almost 40% at the end of September. Hero Honda CD Deluxe has grown by 23% between January-September 2007, while the industry has actually declined by 14% in the entry segment.
Bajaj Auto
Consequently, for the seventh successive year, Bajaj Auto raised its market share in motorcycles to over 33%. Gross sales increased by 24% to an all-time high in excess of Rs.10,600 crore. Its total sales have shown a progress of 5% though it witnessed a decline in the first four months. This has been on account of its exports, which soared 75%.
Bajaj Auto's motorcycle exports grew by 82% to and three-wheelers increased by 87%. It recorded sales of over 150,000 two and three-wheelers in Sri Lanka and of over 100,000 vehicles within a single financial year in Latin America. BAL has commenced production of its new 125 cc DTS-Si motorcycle known as Exceed at Waluj (Aurangabad). With this, almost 75% of Bajaj's motorcycle portfolio would be in the more profitable 125 cc - 250 cc segment.
BAL is targeting sales of 25,00,000 units for FY08. Till date, it has achieved 12,00,000 units and hence now it needs to attain 13,00,000 units, implying an average of nearly 1.9 lakh units every month. This seems to be achievable, however one needs to wait and watch the response it gets for its Exceed model.
TVS Motors
TVS Motors' sales have improved by 4% at 44392 units. But the sales of the mopeds have been depressed (down by 14%) at 37133 units. Exports posted 37% growth over the last year.
The company has entered the three-wheeler segment armed with three two-stroke models of 200 cc, each running on petrol, LPG and CNG. This segment has shown a growth of 18%. The diesel version will come in 18 months. The company also intends to launch four-stroke three-wheelers in six months. It plans to capture at least 30% of the three-wheeler market in the next three years. Currently, Bajaj Auto is the leader with a market share of 42%. The company also aims to export three-wheelers and is looking to assemble them at its Indonesia plant in a year. The company is targeting a growth of 7% - 8% in FY08.
Four-wheelers
In the last few months, four wheeler industry faced many problems such as rising input costs, higher interest rates and soaring fuel prices. Even then, the passenger vehicle segment has shown a growth of 13.6%. The commercial vehicles registered a growth of 3.4%.
Supported by new launches, the passenger vehicle sales have been better than other segments. Passenger car sales grew by 13.5%, utility vehicles by 10.1% and multi-purpose vehicles by 24.4%.
Maruti Suzuki
Maruti Suzuki has outperformed the industry by registering a growth of 19%. Maruti has shown strong growth in A2 and A3 segments due to its launches in this segment. But it has witnessed a slowdown in the A1 segment. In the A2 and A3 segments its market share stands at 59% and 15% respectively. Its exports have soared 60%.
Tata Motors
Tata Motors has been an under performer due to lack of new launches. Its domestic sales plunged by 1% but it has recorded an increase of 8% in its exports. In the commercial vehicle segment, the company has shown a growth of 23%.
At present, the company has 18% share in international business and is targeting to increase it to 25%. Its market share has dipped to 59% as against 64% in the previous year. Inspite of these the company remains second largest player with a market share of 14.9%. The company has allocated a capex of Rs 12,000 crore in the next 3 to 4 years out of which Rs 8,000 crore will be utilized for developing new product and the remaining for capacity expansion.
Mahindra & Mahindra
M&M's total sales have gone up by 22%. Domestic sales grew by 38% on account of its LCV sales. Mahindra launched Logan in April 2007 and the sales were impressive. UVs also registered an impressive growth of 20%, but the three-wheelers were marginally up by 2%. Exports were down by 21% on account of appreciating rupee.
M&M has chalked out a capex of Rs 6,400 crore for the next 3 years which will be utilized for capacity expansion, research and development and product development.
Production
According to the Society of Indian Automobile Manufacturers, the Indian automobile industry has reached double-digit growth for the past three years in a row.
Exports
Automobile exports grew by 17.76% during April-September 2007 over the same
period last year.
Exports were led by two-wheelers, which grew by 24.13%, followed by
commercial vehicles exports at 17.47% and three-wheelers exports at 11.59%. Passenger vehicles exports grew marginally with a growth rate of 2.58%.
Auto components
Auto component industry is quite comprehensive in India. In the organised sector, there are around 500 companies producing automotive components. India's component industry has the capability to manufacture the entire range of auto-components, for example, engine parts, drive, transmission parts, suspension and braking parts, electricals, body and chassis parts, equipment, etc
India has also emerged as an outsourcing hub for auto parts for international companies such as Ford, General Motors, Daimler Chrysler, Fiat, Volkswagon, and Toyota. India enjoys cost advantage. In our country, the manufacturing costs are 25% to 30% lower than western counterparts.
Forecast
By 2010, India will overtake Germany in sales volumes and Japan by 2012. Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians. The Indian automobile component industry is estimated to triple from $63 billion to $190 billion by 2012. It is said that for every Re 1 spent, the auto sector returns Rs. 2.24 to the Indian economy.
By 2010, India is expected to witness over Rs 30,000 crore of investment.
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