Cars and utility vehicles Summary The domestic passenger cars and utility vehicles industry volume is expected to record a

Annual Review

July 2010

CAGR of 14-15 per cent over the next 5 years, primarily driven by small car sales. Launch of low-cost cars like Tata Nano and higher per capita income will drive expansion in the addressable market. With new players setting global exportoriented plants in India, exports are likely to post a CAGR of 1415 per cent until 2014-15. Further, operating margins of the industry are expected to decline by 150-250 bps in 201011, driven by higher raw material cost.

Contents Part A: Low-cost cars to drive growth in passenger cars Executive summary Demand - Review and outlook Exports - Review and outlook Rising raw material cost to reduce operating margins in 2010-11

A-1 A-3 A-13 A-17

Part B: State of the industry Supply: Overview and outlook Automobile engineering service outsourcing - Review and outlook Regulations and policies Fuel technologies International markets Domestic player profile International player profile

B-1 B-5 B-11 B-21 B-27 B-33 B-57

Part C: Industry statistics Industry statistics

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This document has been prepared by Rohit Garg, Sagar Chauhan, Hetal Gandhi and Manoj Mohta (Head of Research). For any queries please get in touch with our client servicing desk. ([email protected]. Ph 022-33423561)

Opinion Sections Executive summary 1.0 Demand - Review and outlook - Short-term parameters indicate continued positive sentiment in 2010-11 and 2011-12 - Long-term growth to be driven by increase in addressable market and stable penetration levels Segment-wise key growth drivers for next 5 years 2.0 Exports - Review and outlook - Export plans of global players include cars as well as critical components 3.0 Rising raw material cost to reduce operating margins in 2010-11

A-1 A-3 A-5 A-9 A-12 A-13 A-13 A-17

Box 1.0 Demand - Review and outlook 01 Research methodology

A-8

1.0 Demand - Review and outlook 01 Framework for the analysis

A-4

Chart

Figures 1.0 01 02 03 04 05 06 07 08

Demand - Review and outlook Salaries and number of IT employees expected to grow Tax savings to outweigh increase in ownership cost Down payment to reduce with increased LTV and penetration Interest rates and EMI Rs per lakh All major players operating at 100 per cent capacity Addressable market will continue to grow Growth in income to drive growth in addressable market Annual cost of ownership (inflation adjusted) continues to decrease

A-5 A-5 A-6 A-6 A-7 A-10 A-10 A-10 Continued…

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

A-i

…continued

Figures 2.0 01 02 03 04

Exports - Review and outlook Dominance of top two players in exports Increasing share of Europe in Indian exports Nissan Micra to drive export volumes Share of exports in total sales

A-13 A-13 A-14 A-14

3.0 01 02 03 04 05 06 07 08 09

Rising raw material cost to reduce operating margins in 2010-11 Favourable product mix increasing net realisation Net realisations per unit to increase by 4.7% Impact on net realisation Comparison of raw material/unit with operating margins Steel price trend Aluminium price trend Index of per unit cost of selling, distribution and royalty Quarterly deseasonalised sales per model - A2 segment (Rs 3-5 lakh) Car and utility vehicle industry profitability trend

A-17 A-18 A-18 A-19 A-20 A-20 A-20 A-20 A-21

1.0 01 02 03

Demand - Review and outlook Segment-wise demand outlook Segment-wise expected model launches Small cars to drive growth of passenger cars

A-3 A-6 A-11

Tables

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2.0 Exports - Review and outlook 01: Company-wise long-term exports growth

A-16

3.0 Rising raw material cost to reduce operating margins in 2010-11 01 Break-up of change in realisation and cost per unit 02 Trends in per vehicle raw material cost

A-18 A-19

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

State of the industry Sections 1.0 Supply: Overview and Outlook

B-1

2.0 Automobile engineering service outsourcing - Review and outlook

B-5

3.0 Regulations and policies - A) Pre-Auto policy era - B) Post-Auto policy era - C) Regulations - Foreign investment and trade regulations - Safety norms - Automotive Mission Plan (AMP) - D) Taxes and duties 4.0 Fuel technologies - Conventional fuels - Alternative fuel options - Hybrid technology 5.0 International markets - United States of America (USA) - Western Europe - Japan - China 6.0 Domestic player profiles - Ford India Limited - General Motors India Ltd - Hindustan Motors Ltd - Honda Siel Cars India Ltd - Hyundai Motors India Ltd - Mahindra & Mahindra Ltd - Maruti Suzuki India Ltd - Mercedes-Benz India Pvt Ltd - Nissan Motor India - Skoda Auto India Pvt Ltd - Tata Motors Ltd - Toyota Kirloskar Motors Ltd - Volkswagen Group India Pvt Ltd 7.0 International player profile - Daimler AG - Ford Motor Company - General Motors Company

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

B-11 B-11 B-12 B-13 B-15 B-17 B-18 B-19 B-21 B-21 B-22 B-24 B-27 B-28 B-28 B-30 B-31 B-33 B-35 B-37 B-39 B-40 B-42 B-44 B-46 B-48 B-50 B-51 B-52 B-54 B-56 B-57 B-58 B-62 B-66

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…continued

Sections 7.0 International player profile Honda Motor Co., Ltd - Hyundai Motor Company - Renault SA - Toyota Motor Corporation

B-57 B-70 B-74 B-78 B-81

3.0 Regulations and policies 01 Homologation

B-17

Boxes

Charts 2.0 Automobile engineering service outsourcing - Review and outlook 01 Composition of engineering services 01 Auto ESO: Trends in kind of outsourcing over the last 15 years

B-6 B-7

Figures 1.0 Supply: Overview and Outlook 01 Capacity utilisation of industry and top three players

B-1 B-1

4.0 01 02 03 04 05

Fuel technologies Europe-Sales and proportion of dieselisation India-Sales and proportion of dieselisation LPG production and consumption MS production and consumption HSD production and consumption

B-22 B-22 B-23 B-23 B-24

5.0 01 02 03 04 05 06 07 08

International markets Cars – region-wise global sales Cars - region-wise growth (y-o-y) US passenger sales & its growth market share of key players Western Europe car sales & growth Performance of key countries Segment-wise break-up of cars sales Western Europe -Share of diesel

B-27 B-27 B-28 B-28 B-29 B-29 B-29 B-29

Continued…

B-ii

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

…continued

Figures 5.0 09 10 11 12 13 14

International markets Domestic sales in Japan and its growth Market share of top five players Exports and its growth rate Domestic sales vs exports China’s car sales & its growth Market share of key players

B-30 B-30 B-30 B-30 B-31 B-31

7.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

International player profile Global sales: Share of key players Automobile division operating performance Region-wise market share 2008 Daimler’s share in passenger car for key markets Ford Motor Company Region-wise market share 2008 Share in key market General Motors Region-wise market share 2008 General Motors’s share in passenger car for key market Honda Motor Corporation Region-wise market share 2008 Honda’s share in total passenger car market Hyundai Motor Company Region-wise market share 2008 Hyundai’s share in total passenger car market Renault SA Region-wise market share 2008 Renault’s share in total passenger car market Toyota Motor Corporation Region-wise market Share 2008 Toyota’s share in total passenger car market

B-57 B-59 B-59 B-60 B-63 B-63 B-64 B-67 B-67 B-68 B-71 B-71 B-72 B-75 B-75 B-76 B-79 B-79 B-80 B-82 B-82 B-83

Tables 1.0 Supply: Overview and Outlook 01 Player-wise estimated capacity 02 Investment plans of OEMs in India over the next 2-3 years

B-2 B-3

2.0 Automobile engineering service outsourcing - Review and outlook 01 Types of entities

B-7 continued…

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

B-iii

…continued

Tables 3.0 01 02 03 04

B-iv

Regulations and policies Roadmap for new vehicles Emission norms Engine technologies for compliance of emission norms Cars and utility vehicles: Tariffs

B-13 B-14 B-16 B-20

4.0 Fuel technologies 01 Level of dieselisation 02 Comparing cost across fuel options

B-21 B-23

6.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Domestic player profiles Number of players Fiat India Pvt Ltd Ford India Ltd (Subsidiary of Ford Motor Company) General Motors India Pvt Ltd Hindustan Motors Ltd Honda Siel Cars India Ltd (Subsidiary of Honda Motors Corporation) Hyundai Motors India Ltd (Subsidiary of Hyundai Motors Corporation) Mahindra & Mahindra Ltd Maruti Suzuki Ltd (Subsidiary of Suzuki Motors Corporation) Daimler Chrysler India Private Ltd (Subsidiary of Daimler Chrysler Group) Nissan Motor India Skoda Auto India Private Ltd (Subsidiary of Volkwagen Group) Tata Motors Ltd Toyota Kirloskar Ltd Volkswagen Group Sales India Pvt Ltd

B-33 B-33 B-35 B-37 B-39 B-40 B-42 B-44 B-46 B-48 B-50 B-51 B-52 B-54 B-56

7.0 01 02 03 04 05 06 07 08 09 10 11 12 13

International player profile International players: Financial summary Financial profile Rating information as on Dec 31, 2009 Financial Profile Rating information as on Dec 31, 2009 Financial profile Financial performance Rating information as on Dec 31, 2009 Hyundai Motor Company: Financial profile Rating information as on Dec 31, 2009 Financial performance Financial performance Rating information as on Mar 31, 2009

B-57 B-58 B-58 B-62 B-62 B-66 B-70 B-70 B-74 B-74 B-78 B-81 B-81

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

Industry statistics Sections 01

Industry statistics

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Passenger cars - Segment-wise domestic sales Passenger cars - Segment-wise domestic market share Passenger cars - Model-wise domestic sales Passenger cars - Model-wise domestic market share Utility vehicles - Model-wise domestic sales Utility vehicles - Model-wise domestic market share Cars - Player-wise domestic sales Cars - Player-wise domestic market share Utility vehicles - Player-wise domestic sales Utility vehicles - Player-wise domestic market share Cars and utility vehicles - Exports Cars and utility vehicles - Player-wise share in total exports Cars - Player-wise production Utility vehicles - Player-wise production Cars & utility vehicles - Segmental product mix

C-1

Tables

CRISIL RESEARCH CARS AND UTILITY VEHICLES ANNUAL REVIEW

C-1 C-2 C-3 C-6 C-9 C-11 C-12 C-13 C-13 C-14 C-14 C-15 C-15 C-16 C-17

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