Frost & Sullivan Research Service   Published: 20 Aug 2004
Forecast of the Indian Automotive Industry
   Research Overview

Indian Automotive Industry: a Booming Buyer’s Market

The past few years have witnessed a rapid change in all the segments of the Indian automotive industry. International competition, increase in the number of participants, and the need to counter the pressure on margins have made it a buyer's rather than a seller's market. Customers have wide model choices and the rising income levels – especially among young adults – coupled with the low equal monthly installments (EMIs) have made vehicle purchase affordable. With foreign competitors focusing on passenger vehicles, domestic participants are scrambling to catch up and compete by investing in R&D and improving overall efficiency.

This Frost & Sullivan research service looks at the future of the Indian automotive industry, providing sales forecasts for the various vehicle segments – two-wheelers, passenger vehicles (including cars and multi-utility vehicles), commercial vehicles (trucks and buses), and tractors. The research also includes forecasts at the model level for the two fast growing segments – passenger cars and two-wheelers.

Passenger Car and Two-Wheeler Segments Lead In Sales Volumes

The passenger car and two-wheeler segments account for around 90 percent of total volume sales in the industry. The entry of multinationals has dramatically increased competition in the Indian passenger car market. There are 11 foreign carmakers offering over 80 different models to customers in India. Sales in the economy-range segment account for 50 percent of the market for ‘A’ models that are priced below $6,700 (Rs300,000) and 'B' cars in the price range of $6,700 to $11,000 (Rs300,000 to Rs500,000). "Automobile manufacturers are now intending to provide cars at every price point and reaching more potential customers," notes the analyst of this research.

The price range of $490 to $2,000 (Rs22,000 to Rs90,000) makes two-wheelers a viable option for users who cannot afford a car. Motorcycle sales have continued their upward journey in the financial year 2003-2004 with customer preference markedly shifting to this segment. The demand for scooterettes is also rising with the introduction of new models.

Trend toward Multi-Axle Commercial Vehicles Bodes Well for Manufacturers

Spur in demand is also expected from the multi-utility vehicle (MUV) segment, and especially the sports utility vehicle (SUV) that is rapidly becoming the second family vehicle. Among other positive trends for the industry is the shift toward multi-axle commercial vehicles. These vehicles offer improved operating economics over single-axle vehicles. The higher cost of a multi-axle vehicle means more revenues for truck manufacturers. The long slack in tractor sales has also shown signs of abating and is slowly recovering due to a better-than-expected monsoon that has lead to higher agricultural output, and hence, increased purchasing power.

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   Benefits of this Service
  • This research provides clients with an idea of the future growth prospects of various segments in the Indian automotive industry. The study helps them understand the various demand drivers and restraints that cause a particular segment to grow or decline.
  • The information is likely to help auto manufacturers understand the various demand trends in the industry and guide them in building appropriate strategies in terms of launching new models, building production capacities, and marketing.
  • Auto component manufacturers can use this research to plan their investment (in production capacities) strategy in the future. The study is expected to help them in targeting new original equipment manufacturers or increase exposure in segments indicating good growth potential for the future.
  • The information is also anticipated to be helpful to car and two-wheeler finance companies as they plan their strategies.
   Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

  • Personal transportation – passenger cars, two-wheelers (scooters, motorcycles, scooterettes, and mopeds) and multi-utility vehicles
  • Mass transportation – buses, multi-utility vehicles, and three-wheelers
  • Goods transportation – medium and heavy trucks, light trucks, multi-utility vehicles (pick-up trucks), and three-wheelers
  • Tractors
   Analyst Presentation

Click here to view the analyst presentation:

4148-18 presentation.ppt






  Table Of Contents

1. Executive Summary
        1. Executive Summary
                1. Introduction
        2. Summary of Major Findings
                1. Personal Transportation Segment
                2. Goods Transportation Segment
                3. Mass Transportation Segment
                4. Tractors
        3. Conclusion
                1. Conclusion

2. Total Market Analysis
        1. Market Overview
                1. Introduction
                2. Personal Transportation
                3. Goods Transportation
                4. Mass Transportation
                5. Tractors

3. Personal Transportation Market in India
        1. Introduction
                1. Introduction
        2. Passenger Cars
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Rise in Disposable Income Levels
                b. Greater Availability of Finance Schemes
                c. Fall in Excise Duties To Spur Demand for Passenger Cars
                d. Frequent Launches of New Models and Variants
                e. Rising Export Opportunities
                4. Market Restraints
                a. Rising Fuel Prices
                b. Improving State of Mass Transportation
                c. Growth in Sales of Used Cars
                5. Market Trends
                6. Market Forecast
                7. Conclusion
        3. Two-wheelers
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Rise in Disposable Income Levels
                b. High Replacement Demand From Scooter and Moped Owners
                c. Introduction of New Models in the Motorcycle Segment
                d. Higher Penetration of Finance Schemes
                e. Falling Price Differential between Personal and Mass Transportation Vehicles
                f. Rising Urbanization Likely to Lead to Further Pressure on State Transport
                    Corporations (STCs)
                g. Rising Population of Working Women Expected to Drive Demand for Scooterettes
                h. Introduction of New Models Predicted to Drive Demand in the Scooterette
                i.  Lower Penetration of Two-wheelers Points to Further Growth Potential
                j. Increase in Consuming Class Likely to Drive Two-wheeler Demand
                k. Rising Aspiration Levels in Rural India
                l. Secondhand Sales Programs Predicted to Spur Sales of Scooterettes and
                4. Market Restraints
                a. Fall in Economic Growth
                b. Rising Fuel Prices
                c. Increasing Sales of Used Cars
                d. Improving State of Mass Transportation
                5. Market Trends
                6. Market Forecast
                7. Conclusion
        4. Multi-utility Vehicles
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Introduction of New Models
                b. Increasing Trend to Buy MUVs as a Second Vehicle
                c. Increasing Spend on Leisure and Recreational Activities
                4. Market Restraints
                a. Paucity of Parking Space in Cities
                b. Increase in the Number of Nuclear Families
                c. Non-availability of Models in the sub-$11,000 Range
                d. International Experience
                5. Market Forecast
                6. Conclusion

4. Goods Transportation Sector in India
        1. Goods Transportation Sector in India
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Increase in Industrial and Agricultural Growth
                b. Need to Carry Smaller Loads to Drive Demand for Three-wheelers
                c. Dual Use Likely to Drive Demand for Pick-up Trucks
                d. Increasing Sales of Multi-axle Vehicles
                e. New Model Launches to Drive Demand for LCVs
                f. Investment in Road Infrastructure to Drive CV Sales
                g. Lower Interest and Easier Availability of Finance
                h. Free Movement of Goods Could Translate into Additional Freight Demand
                i. Higher Defense Sales Expected to Sustain Revenues
                j. Increasing Consolidation to Drive Demand for LCVs
                k. Regulatory Changes Likely to Drive Replacement Demand
                4. Market Restraints
                a. Economic Slowdown and Rising Share of the Services Sector
                b. Rise in Diesel Prices to Restrain Demand
                c. Increasing Consolidation Predicted to Affect Demand for MCVs
                d. Increasing Sales of MAVs Likely to Affect Replacement Demand
                e. Increasing Competition from Railways and Pipelines
                f. Increasing Consolidation Expected to Affect Manufacturer’s Margins
                g. Increasing Availability of Remanufactured Trucks
                5. Market Trends
                6. Market Forecast
                7. Conclusion

5. Mass Transport Sector in India
        1. Mass Transport Sector in India
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Introduction of New Models to Boost Sales
                b. Poor State of Road Infrastructure in Rural Areas to Drive Sales of MUVs
                c. Inefficient Operations of STCs to Drive Sales of Maxicabs
                d. Growth in Service Sector to Push Sales of LCVs
                e. New Emission Norms Expected to Push Sales of Low Polluting Vehicles
                f. Better Road Infrastructure Could Generate Demand for Luxury Buses
                g. Higher Replacement Demand and Exports to Drive Three-wheeler Sales
                h. Move to Increase Private Sector Participation by STCs
                i. Replacement Demand Due to Over-aged Fleet and High-capacity Utilization
                4. Market Restraints
                a. Bad Financial Health of STCs
                b. Rapid Urbanization Levels
                c. Falling Cost Differential between Mass and Personal Transportation Vehicles
                d. Difficulty in Getting Permits Predicted to Affect Sales of Three-wheelers
                e. Rising Sales of Two-wheelers to Impact MUV/maxicab Sales
                f. Competition from Rail Transit Systems in Urban Areas
                5. Market Forecast
                6. Conclusion

6. The Tractor Market in India
        1. The Tractor Market in India
                1. Introduction
                2. Current Scenario
                3. Market Drivers
                a. Low Tractor Penetration in Indian States
                b. Liberalization in Tractor Financing Norms
                c. Increasing Number of Model Launches
                d. Rising Institutional Support for Farm Mechanization
                e. Increase in Irrigation Potential and Fertilizer Consumption
                f. Shift from Food Grains to Cash Crops
                g. Increasing Export Opportunities
                4. Market Restraints
                a. Agricultural Growth is Still Largely Dependent on Monsoons
                b. Structural Deficiencies in the Indian Agricultural Sector
                c. Large Number of Small Land Holdings
                d. Build-up of Excess-dealer Inventory Affects Demand
                5. Market Trends
                6. Market Forecast
                7. Conclusion

7. Market Engineering Forecasting Methodology
        1. Market Engineering Forecasting Methodology
                1. Overview
                2. Judging Credibility and Accuracy of Market Engineering Forecasts

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