Report On Indian Passenger Vehicles Industry

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Reort On Passenger Vehicles Industry
Indian Passenger Vehicle Industry: "CAUTION: SPEED BREAKER AHEAD"
The Indian Passenger Vehicle (PV) Industry has always been backbone for the economic growth of a nation. The growth levels remained subdued last fiscal mainly due to negative sentiments arising due to economic uncertainties, spiralling fuel prices and interest cost coupled with escalating inflation levels prompted many customers to defer their purchase decision. The rising gap between the petrol and diesel prices has led to the surge in diesel driven passenger vehicles. It is expected that the Indian PV market is likely to witness many new launches especially in the SUV segment.

CARE Research believes long-term macro factors like low penetration, rising disposable income and favourable demographics remains intact. At present, the penetration levels for passenger cars in India is significantly lower as compared to the emerging markets. The small car segment is likely to remain the main stay of the industry. However, large product offerings in diesel as well as emergence of super compact sub-segment within mid-size will drive growth for midsize cars. The competitive advantage arising out low-cost destination, proximity to Asian markets and lower shipment costs makes India a sourcing hub and a manufacturing base for major Original Equipment Manufacturers (OEM's). Vehicles Industry

CARE Research has developed a detailed statistical model that attempts to forecast the domestic passenger vehicle sales. The sales are segregated between personal use and commercial use based on the interaction with the industry and analytical acumen. Vehicle sales for commercial sales is forecasted based on the service sector GDP growth, while the vehicle sales for personal use are forecasted based on ownership cost and the target household that can afford to own a car. Other qualitative factors like macro-economic outlook, consumer confidence, willingness of vehicle financers to finance purchases, actions of OEMs like launches, aggressiveness, sales push techniques, dealer network etc have also been quantitatively built in the demand forecasting model.


Outlook on Indian PV industry
Domestic market is expected to grow at a CAGR of 10-11 per cent by FY17
Small car segment to grow at a CAGR of 6-7 per cent in next five years
Mid size segment to record rise of 17-18 per cent by FY17
A4-A6 to remain niche segment

UV to grow at a CAGR of around 15-16 per cent during FY12-FY17 period
Inadequate public transport infrastructure to fuel growth in MPV segment
Rising young population coupled with rising income and low penetration levels will fuel growth
Topline growth to remain healthy on back of high realization
Growing demand for mid-size cars and rise preference for diesel variants to boost the realization in the medium term
Retail price of diesel have remained more stable among all the fuels
CNG still remains the cheapest option
Diesel vehicles will surpass market share of petrol vehicles in the near term.
Operating margins to improve in not before FY14
Investments of around $3 billion expected in the next 3 years
Asian markets to fuel the growth in short term as demand drops in the European markets.

Industry Segments & Competition
PC dominates volumes however UV drives the growth
Small Cars face competition from the mid-sized cars; however, the
dominance of small cars to continue for now
Preference is shifting towards mid-sized cars
A4-A6 faces cannibalization from premium segment UVs

UV improves presence in PV industry...
MPV Segment continue to remain niche market

Motor Vehicle Act
Emission Norms
Fiscal Regulations
Import duty
Excise Duty
VAT/Sales Tax
Foreign Direct Investment
Research and Development

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