Impact of Macro-economic Environment on the Automotive Industry · 2019-06-14 · 7 IIP posts a meagre 0.1% growth on y-o-y basis IIP Exchange Rates Source: MoSPI, Crisil Research

1

Fo

r In

tern

al U

se

On

ly –

No

t F

or

Exte

rnal D

istr

ibutio

n

Impact of Macro-economic Environment on the Automotive Industry

ACMA

April 2019

2

Content

Macro-economic Analysis

Forecast

Cars and UVs

Two-wheeler

Commercial Vehicles

Tractors

Three-wheelers

Inventory scenario

3

Macro-economic Analysis

4

Consumption, investment and rural push to support GDP growth rate of 7-7.5% in FY20

Note: GDP – Gross domestic product; Data on 2011-12 base, P=Projected

Source: Central Statistical Office, MOSPI, CRISIL Research

Policy logjam &

stimulus withdrawal

Demonetisation &

GST

Global Financial Crisis

7.9% 8.1%7.7%

3.1%

7.9%

8.5%

5.2% 5.5%

6.4%

7.4%

8.0% 8.2%

7.2% 7.0% 7-7.5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 E FY20 P

GDP Y-o-Y Growth

• CRISIL expects GDP to grow 7-7.5% in fiscal 2020. Growth will be driven by budgetary announcements that is expected to push consumption, and supported by

normal rains and benign inflation.

5

GVA growth in fiscal 2019 improves, led by manufacturing, financial, real estate and professional services

Source: Central Statistical Office, MOSPI, CRISIL Research.

P=Projected

1.5%

5.6%

-0.2%

0.6%

6.3%

2.7% 2.8-3.2%

8.3%7.7%

9.8%

8.4%8.1%

7.4%

7.9-8.3%

3.3%3.8%

7.0%

9.6%

7.7%5.9%

7.7%

7.7-8.2%

-2%

0%

2%

4%

6%

8%

10%

12%

FY13 FY14 FY15 FY16 FY17 FY18 FY19 P FY20 P

GVA Agri GVA Services GVA Industry

• In fiscal 2020, we expect the industry GVA to grow on the back of private investments and consumption. Private consumption should lead the pick-up, supported by

budgetary announcements. Given push to consumption and government spending taking backseat should lead to improvement in capacity utilization and private

investments.

6

CPI inflation expected to rise in fiscal 2020

Inflation (CPI Avg. %)

Note: CPI – Consumer Price Index

Source: Ministry of Statistics and Programme Implementation (MoSPI), CRISIL Research

9.4%

5.9%

4.9%4.5%

3.6% 3.5%

4.5%

0%

2%

4%

6%

8%

10%

FY14 FY15 FY16 FY17 FY18 FY19E FY20P

• CRISIL Research expects CPI inflation to rise to 4.5% in fiscal 2020

• In fiscal 2020, however, inflation may see some upside due to consumer friendly budget, implementation of Pay Commission hikes by more states and other

populist measures such as farm loan waivers

7

IIP posts a meagre 0.1% growth on y-o-y basis

IIP Exchange Rates

Source: MoSPI, Crisil Research Source: RBI, FBIL, Crisil Research

Note – For Yen rupees value are per 100 Yen

54.41

60.49 61.1465.47 67.07

64.45

69.92

85.96

96.1198.57 98.72

87.6985.51

91.79

70.05

81.1877.53

72.29 73.6175.44

80.95

65.85

60.41

55.82 54.59

62.0458.18

63.03

40

50

60

70

80

90

100

110

FY13 FY14 FY15 FY16 FY17 FY18 FY19

US Dollar Pound Sterling Euro Yen

1%

4%

3%

0%

5%

2%

8%

7%

5%

4%

7%

4%

8%

1%

2%

0.1%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

105

110

115

120

125

130

135

140

145

Fe

b-1

7

Ma

r-17

Apr-

17

Ma

y-1

7

Ju

n-1

7

Ju

l-1

7

Aug

-17

Sep

-17

Oct-

17

Nov-1

7

Dec-1

7

Ja

n-1

8

Fe

b-1

8

Ma

r-18

Apr-

18

Ma

y-1

8

Ju

n-1

8

Ju

l-1

8

Aug

-18

Sep

-18

Oct-

18

Nov-1

8

Dec-1

8

Ja

n-1

9

Fe

b-1

9

IIP Index Growth (%)

• IIP growth decelerated to 0.1% in February 2019, lower than the 1.7% seen in January 2019. The slowdown was led by electricity and manufacturing sectors.

• The cumulative growth for the period April-February 2018-19 over the corresponding period of the previous year stands at 4.0 percent.

8

Crude oil prices expected to inch slightly lower

Source: CRISIL Research

97.6

61.9

79.6

110.9 112.0108.9

98.9

52.4

43.8

54.4

71 67-72

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E

US

D p

er

ba

rre

l

Sanctions imposed on

Iran

Sanctions on Iran was eased

Falling output from

Venezuela

Sanctions on Iran

9

Consecutive normal monsoons & better MSP to support favourable farmer sentiments

Monsoon deviation from long normal rainfall levels

Source: Ministry of Agriculture & Farmers Welfare

13

60

22

0

14

50

37

50

31

75

14

70

23

0

16

25

38

60

40

00

17

50

27

5

18

40

51

50

46

20

0

2000

4000

Paddy Sugarcane Wheat Cotton Gram

FY15 FY16 FY17 FY18 FY19

Rs/ quintal

MSP of major crops in the last 5 years

-21.80%

2% 1.60%

-7.10%

5.60%

-11.90%

-13.80%

-2.60%

-5%

-9%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Note: Years mentioned are calendar years

Source: Indian Meteorological Department

10

BSE Sensex NSE Nifty

Uptick in Sensex and Nifty in 2019 Q4

Source: BSE Source: NSE

-2.7%

6.5%4.5%

19.4%

17.1%

14.4%

24.2%

18.9%

13.2% 14.0%

3.3%5.1%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

2000

4000

6000

8000

10000

12000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY17 FY18 FY19

NSE NIFTY 50 % increase

-4.1%

4.7%2.9%

17.5%16.0%

13.2%

23.7%

19.9%

15.1%

17.7%

6.3%7.4%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

5000

10000

15000

20000

25000

30000

35000

40000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY17 FY18 FY19

BSE Sensex % increase

11

Forecast

12

Pre-bought sales volume from Q1 FY 21 is adjusted in H2 FY 20 to arrive at sales outlook

Pre-buying impact calculation methodology


FY 20 FY 21

Q1 Q2 H2

Q1 FY 21 sales volume pre-

bought in H2 FY 20

H1 H2

H1

H2 + pre-bought

volume from Q1

FY 21

Sales outlook

without pre-buying

impact

Revised Sales

outlook with pre-

buying impact

1H2 FY 20 wholesale sale is also adjusted for change in inventories at dealership since BS IV stock

needs to be liquidated before Apr 1st, 2020

Dealer inventory adjustments1

13

Projected versus actuals (Domestic)

Passenger vehiclesCars

UVs and vans

Two-wheelers

Motorcycles

Scooters

Mopeds

LCV (<3.5T)

LCV (3.5-7.5T)

MHCV

Buses

Commercial

vehicles

Tractors

Three-wheelersPassenger

Goods

Projected

3-5%

4-6%

9-11%

4-6%

4-6%

21-23%

4-6%

14-16%

4-6%

10-12%

9-11%

7-9%

Actuals

2%

4%

8%

0%

2%

22%

7%

15%

8%

8%

11%

9%

FY19

Source: SIAM, CRISIL Research

14

Projections for fiscal 2020 – domestic, exports and total sales

Passenger

vehicles

Cars

UVs and vans

FY 20P

Two-wheelers

Motorcycles

Scooters

Mopeds

LCV (<3.5T)

LCV (3.5-7.5T)

MHCV

Buses

Commercial

vehicles

Tractors


Goods

FY 19 FY 20P

0-2%

1-3%

10-12%

9-11%

8-10%

9-11%

4-6%

10-12%

0-2%

5-7%

9-11%

10-12%

FY 19

(11)%

(4)%

15%

26%

(4)%

2%

(27)%

27%

(24)%

8%*

49%

47%

FY 20P

4-6%

1-3%

4-6%

1-3%

2-4%

8-10%

(1)-(3)%

9-11%

1-3%

2-4%

9-11%

8-10%

FY 19

(1)%

3%

9%

1%

2%

21%

2%

16%

3%

8%

27%

10%

Domestic Exports Total sales

5-7%

1-3%

3-5%

1-2%

2-4%

8-10%

(2)-(4)%

9-11%

1-3%

2-4%

9-11%

8-10%

2%

4%

8%

0%

2%

22%

7%

15%

8%

8%

11%

9%

NOTE: *For tractor exports of fiscal 2019, players such as Action-construction, Captain, IFEL, Kubota and Preet are not included because of unavailability of data

SOURCE: SIAM, TMA, CRISIL Research

15

Domestic sales forecasts across vehicle segments

Passenger vehiclesCars

UVs and vans

Q1 FY 20 Q2 FY 20 Q3 FY 20

(9)-(11)% 2-4% 19-21%

(10)-(12)% 4-6% 24-26%

Two-wheelers

Motorcycles

Scooters

(7)-(9)% (2)-0% 16-18%

(16)-(18)% (4)-(6)% 19-21%

Mopeds (1)-(3)% (4)-(6)% 10-12%

LCV (<3.5T)

LCV (3.5-7.5T)

5-7% 11-13% 24-26%

4-6% 2-4% 8-10%

MHCV (1)-(3)% 8-10% 30-32%

Buses 3-5% 3-5% 40-42%

Commercial

vehicles

Tractors


Goods

(5)-(7)% 3-5% 3-5%

5-7% 5-7% 23-25%

2-4% 6-8% 22-24%

Q4 FY 20

10-12%

(8)-(10)%

9-11%

14-16%

7-9%

(6)-(8)%

(25)-(27)%

1-3%

(22)-(24)%

11-13%

3-5%

3-5%

FY 20

5-7%

1-3%

3-5%

1-2%

2-4%

8-10%

(2)-(4)%

9-11%

1-3%

2-4%

9-11%

8-10%

SOURCE: CRISIL Research

16

Cars and UV

17

Fuel prices have turned adverse as compared to last year

NOTE : CPI index base 2000-01 ; *Fiscal 2020 crop value index assumed neutral, assuming normal monsoon

F: Favorable, N:Neutral, NF: Non-Favorable


Parameters Impact

FY 18 FY 19E FY 20P

Demand side variables

-- Real GDP growth 6.7% 7.0% 7-7.5%

-- CPI growth (%) 3.6 3.7 4.5

-- Crop Value index N N N*

-- Car Price growth 5% 6% 4%

Cost of ownership

-- Petrol Prices Rs 77.0/ liter Rs 82/ liter NF

-- Diesel Prices Rs 61.7/ liter Rs 72/ liter NF

-- Car finance rates F NF F

Supply side variables & financing

-- Finance Penetration 76.6% 77.5% 78.0%

-- Model launches N N F

-- Regulations/taxes F NF N

-- Capacity expansion/constraints NF N N

18

Expected fall in fuel prices and upcoming model launches are expected to turn PV sales sentiment

Fuel prices significantly higher than past 5 year average


50.3

58.8

62.3

54.0

57.6

61.7

72.0

75.1

77.6

74.7

68.570.2

77.0

82.0

40

45

50

55

60

65

70

75

80

85


Diesel price Petrol price

Year Month Company Model Segment Impact

2019

April

Mahindra eKUV100 UV Low

2019 Hyundai Carlino UV Low

2019 Jeep Wrangler UV Medium

2019 Hyundai Qxi UV Low

2019May

Audi A6 2019 Large Cars Low

2019 Tata Tigor EV Small Cars Medium

2019

June

Hyundai Santa Fe 2019 UV Low

2019 Renault Duster 2019 UV Low

2019 Renault Arkana UV Low

2019 Mahindra TUV 300 UV Low

2019 Hyundai Sonata 2019 Large Cars Low

2019 Tata Altroz Small Cars Low

2019 Skoda Karoq UV Low

2019July

MG Hector UV Medium

2019 Mahindra e20 NXT Small Cars Low

Major Upcoming Launches and their contribution


19

Cost of ownership to rise marginally in short term

Note: Above numbers represent annual expenditure (cost of ownership) for an entry level small petrol car (Maruti Alto 800). Annual Running : 10,000 km. Mileage : 16 km per litre


Total Cost in ‘000

Cost of Ownership

FY 15 FY 16 FY 17 FY 18 FY 19 FY 20P

92

69

13

3

Down

Payment

Loan

repayment

Fuel cost

Insurance

cost

Maintenance

cost

95

71

36

13

3

94

71

37

13

3

93

70

41

13

3

87

73

44

17

4

91

76

42

18

4

216 219 218 219 225 234

39

20

Better income prospects and paced road development expected to help better demand

Expansion in Addressable market at faster pace Construction of rural roads to stay strong over short-term


Note – (1) In order to calculate addressable households, we have considered ability to

purchase entry-level petrol car.

(2)The addressable market is estimated on the basis of cost of owning a vehicle at 30% of

household income.

9.3 10.6 12.4 13.8 13.9 13.6

27.4

38.135.2

47.4 48.746.7

0

10

20

30

40

50

60

FY14 FY15 FY16 FY17 FY18 FY19 E

‘00

0 k

ilo

me

ters

State Roads Constructed Rural Roads Constructred

279 284 290

4861 69

0

50

100

150

200

250

300

FY 17 FY 18 FY 19

mil

lio

n

Total HH Addressable HH for Small car

Source: OMMS (Online Management, Monitoring and Accounting System), CRISIL Research

P : Projected.

21

Loan-to-Value on upward trajectory since last few years

Interest Rates for PV Loan-to-Value for PV

Source: CRISIL Research Source: CRISIL Research

75.0% 75.0% 75.0% 75.0%75.5%

76.0%76.5%

71.0% 71.0% 71.0%71.5%

72.5%

73.4%

74.3%

68%

69%

70%

71%

72%

73%

74%

75%

76%

77%

78%

FY13 FY14 FY15 FY16 FY17 FY18 FY 19

Cars UV

10.1% 10.0% 9.8%9.4% 9.2% 9.1% 9.3% 9.4%

13.8%

12.9%

12.0%

10.6%

12.1%11.8% 12.0%

11.5%

11.5%

8%

9%

10%

11%

12%

13%

14%

15%

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

FY 16 FY 17 FY 18 FY 19

Car loan Used car loan

22

Disbursement towards UVs to continue to drive PV disbursement

Auto Finance Penetration PV Disbursements

Source: CRISIL Research Source: SIAM, CRISIL Research

74.5% 75.0% 75.5% 76.0% 76.5% 77.0% 77.5% 78.0%

66.0%67.0%

68.5%69.5%

71.0%

72.5%73.5% 74.0%

60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

80%

FY13 FY14 FY15 FY16 FY17 FY18 FY 19 FY 20 P

Cars UV

63

0

71

3 82

9 97

0

10

75

13%

16%17%

11%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

200

400

600

800

1000

1200

FY 15 FY 16 FY 17 FY 18 FY 19

Bil

lio

n

PV disbursements Y-o-Y Growth

23

Regulations shaping Passenger vehicle industry in India

2000 2003 2006 2009 2012 2015 2018 2021 2024

BS I

BS II*

BS III*

BS IV* BS VI

Crash Test

Safety

Norms

Pedestrian

Safety

ESC

CAFÉ

Norms

BS II^

BS III^

BS IV^

NOTE: *- Introduction of norm in NCR and 13 cities

^- Nationwide implementation

BS – Bharat stage (Emission Regulations), CAFÉ- Corporate Average Fuel Efficiency, AEB - Autonomous Emergency Braking, ESC - Electronic Stability Control

CAFÉ 2

Norms


24

Poor sales in H2 FY19 has dampened utilization level

Utilization level has fallen due to lower domestic sales Top players running on optimum capacity

Source: CRISIL Research Estimated

Player

Effective Capacity

estimate (in ‘000) (as on

31st Mar 2019)

Production (FY19)

(in ‘000)

Capacity utilization

in FY19

Maruti 1800 1825 104%

Hyundai 763 716 96%

Tata Motors 564 225 40%

Ford India 440 256 59%

Renault-Nissan 480 185 40%

General Motors 165 77 47%

Toyota 310 160 55%

Honda 300 180 59%

Volkswagen 179 91 53%

Other Players 551 299 54%

Industry Total 5552 4026 73%

Planned Capacity Addition’s

Player LocationCapacity lacs

units paInvestment Commissioning

Kia Motors Anantpur AP 3 Rs 65 B FY 19

Maruti Suzuki Mehsana Gujarat 1.5 Rs 85 B FY 20

Maruti Suzuki New Plant 2.5 Not disclosed ~ FY20

PSA Tiruvallur , TN 1 Rs 7 billion FY20

Note: Honda Cars acquired a 380 acre plot in Vithalpur, Gujarat in 2017

Note : Maruti Suzuki plants are working in double shifts resulting in more than 100%

utilization rates; Source: SIAM, CRISIL Research

74%

68%65% 65%

71%

75%73%


25

Passenger Vehicle Exports

Africa

23%

Asia

20%

European Union

10%

Middle East

9%South America

11%

Note: : Latest numbers available for FY 2018 on DGFT

Source: DGFT, CRISIL Research

North America27%

26

In FY19, small cars share has improved

Top 2 domestic players gaining share in India’s exports


Share Of Compact UV’s in exports on the rise

31% 25% 22% 21% 24%

20%19%

16% 17% 16%

19%17%

14%9% 9%

13%17%

21%25% 24%

10%12%

11% 12% 9%

6% 9% 11% 11%

6% 5% 6% 6% 7%

0%

20%

40%

60%

80%

100%

FY 15 FY 16 FY 17 FY 18 FY 19

Hyundai Motors India Ltd. Maruti Suzuki India Ltd. Nissan Motor India Pvt. Ltd.

Ford India Ltd. Volkswagen General Motors India Ltd.

Others

90%

69% 63% 64%57% 61%

10%

10% 19%8% 19% 6%

5%17%

13%21%

19%

16%1%

14%3%

14%

0

0.2

0.4

0.6

0.8

1

Exports Domestic Exports Domestic Exports Domestic

FY 11 FY 16 FY 19

Small Cars Large Cars Compact UV's Other UV's & vans


27

Domestic sales - Cars

Q1 FY20P Q2 FY20P Q3 FY20P Q4 FY20P

(10)% 3% 20% 11%


• Domestic sales began to weaken in fiscal 2019 after devastating floods in Kerala, followed by poor festive due to higher fuel and regulatory

cost and liquidity crunch. Higher insurance cost and volatile oil prices led to lower consumer sentiments.

• Amid uncertainty of elections, we expect domestic sales of cars to register a growth of 5-7% in fiscal 2020 with above normal inventory in the

start of the year.

• However, H2 of Fiscal 2020 is expected to see incremental growth aided by preponement due to implementation of BS VI.

1.79 1.88 2.03 2.10 2.17 2.22 2.35

-4%

5%

8%

4% 3%2%

5-7%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

0

1

1

2

2

3

FY14 FY15 FY16 FY17 FY18 FY19 FY20P

Yo

Y G

row

th

Do

me

stic s

ale

s (

in m

n)

Domestic sales Growth

28

Domestic sales – UVs and vans


(11)% 5% 25% (9)%

• Similar to cars, utility vehicles and vans has recorded a sluggish growth in fiscal 2019 due to lower sentiments on the ground plus higher cost

of ownership due to mandatory insurance

• From fiscal 2021 onwards, Omni model is expected to be discontinued due to higher cost of upgradation.


0.72 0.72 0.76 0.94 1.11 1.16 1.18

-9%

1%

6%

24%

18%

4%1-3%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4


Yo

Y G

row

th

Do

me

stic s

ale

s (

in m

n)


29

Two-Wheelers

30

Improvement expected across most parameters

30

Parameters Impact

FY 18 FY 19E FY 20P

Demand side variables

-- Real GDP growth 6.7% 7.2% 7-7.5%

-- Rural Roadways Investments (INR bn) 170 183 F

-- Crop Value index N N N*

Cost of ownership

-- Petrol Prices Rs 77.0/ liter Rs 82/ liter NF

-- Interest rates F NF F

Supply side variables & financing

-- Finance Penetration 30% 31% 32%

NOTE : CPI index base 2000-01 ; *Fiscal 2020 crop value index assumed neutral, assuming normal monsoon

F: Favorable, N:Neutral, NF: Non-Favorable


31

Increasing penetration of credit bureau and competition among financiers to boost LTV ratios

Interest Rates Loan-to-Value

Source: CRISIL Research, Estimated from Jan onwards as one of the banks rate not available Source: CRISIL Research

69% 69% 69%

70% 70%

71%

68%

69%

70%

71%

72%

FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 P

13.9%

13.2%13.1% 13.1%

13.4% 13.4%13.5%

13.5%

13.4%

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

32

Finance penetration to remain at current levels

Auto Finance Penetration Two-Wheeler Disbursements

Source: CRISIL Research Source: SIAM, CRISIL Research

28%

29%

30%

32%

33% 33%

25%

26%

27%

28%

29%

30%

31%

32%

33%

34%

FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 P

158172

203

251

293

9.1%

18.1%

23.5%

16.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0

50

100

150

200

250

300

350

FY 15 FY 16 FY 17 FY 18 FY 19

Rs

Bill

ion

Two -wheeler disbursements (Rs Bn) Y-o-Y Growth

33

Regulations timeline and price impact

FY17

BS IV norms for new vehicles

FY18

BS IV norms for all vehicles

FY19

ABS/CBS norm for new vehicles

Insurance norms: Increase in cost of

ownership by 13-15%

FY20

ABS/CBS norm for all vehicles

Rs 500 CBS hike on average for economy bikes

Rs 1000 CBS hike on average for executive segment

FY21

BS VI norms for all vehicles

Around 6-8% cost increase

To impact the economy segment the most


Segments % increase in

cost due to

BS VI

Pre-buying

expected

Motorcycle

Economy 7% Medium

Executive 6% Medium

Premium 7% Low

Scooter 8% Medium

Mopeds 10% Medium

34

Utilisation rates to rise in fiscal 2020

Utilization rates decreased in fiscal 19 Improved demand to help boost utilization rates


Player

Effective Capacity

estimate in mn (as on

31st Mar 2019)

Production (2018-19)

(in mn)


(%)

Hero Motocorp 11.0 7.83 71%

Bajaj Auto 5.4 4.23 78%

HMSI 6.4 5.9 92%

TVS Motor

Company3.9 3.7 95%

India Yamaha

Motors1.6 1.1 69%

Suzuki Motors 1.1 0.7 64%

Royal Enfiled 0.95 0.84 88%

Piaggio Vehicles 0.3 0.09 30%

Other Players 1.55 0.01 0.6%

Industry Total 32.2 24.4 76%

Expected capacity additions

Player Location Capacity lacs units Investment Commissioning

Hero Motocorp Chittor 0.5

Rs 16 billion*

Dec 20

Hero Motocorp Chittor 0.8 Dec 23

Royal Enfield Chennai 0.1 Rs 8 billion FY 20

Note : Capacity utilization estimates of Bajaj Auto and TVS Motor Co Ltd exclude three-wheelers


76%

69% 69%

78%

76%

64%

68%

72%

76%

80%

FY 15 FY 16 FY 17 FY 18 FY 19

* Includes earlier investment made on expansion of 0.5 mn capacity which is operational from Dec 18

35

Two-Wheeler Exports

Africa31%

Asia43%

European Union2%

Middle East2%

South America13%

Note: : Latest numbers available for FY 2018 on DGFT

Source: DGFT, CRISIL Research

North America9%

36

HMSI / TVS expand their share, but Bajaj maintains its clear lead

Bajaj dominates the export segment

Note: Others include Suzuki, Royal Enfield, Mahindra, Piaggio, Harley Davidson etc


63% 62% 59%52% 50% 52%

12% 13%14%

16% 17%19%

8% 8% 8%12% 12%

12%

9% 7% 6% 7% 9% 7%

6% 8% 8% 8% 7% 6%

1% 2% 4% 5% 4% 4%

0%

20%

40%

60%

80%

100%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Bajaj TVS HMSI Yamaha Hero Others

37

Domestic sales - Motorcycles


(8)% (1)% 17% 10%


• Fiscal 2019 recorded a growth of 8% despite higher insurance cost, liquidity constraints and fuel price hike.

• In fiscal 2020, we expect motorcycles to remain subdued due to year starting with the higher inventory levels. However, pre-buying due to BS VI is expected to set off this impact.

10.5 10.7 10.7 11.1 12.6 13.6 14.1

4%

2%

0%

4%

14%

8%

3-5%

-4%

0%

4%

8%

12%

16%

0

4

8

12

16


Yo

Y G

row

th

Do

me

stic s

ale

s (

in m

n)


38

Domestic sales - ScootersQ1 FY20P Q2 FY20P Q3 FY20P Q4 FY20P

(17)% (5)% 20% 15%


• Scooters registered a degrowth in fiscal 2019 by 0.27% mainly due to lower consumer sentiments in urban areas.

• Honda has announced production cut by almost 15-20% in Q1 of fiscal 2020.

• Due to uncertainty of election outcome, we expect the scooter segment to remain stagnate in fiscal 2020.

3.6 4.5 5.0 5.6 6.7 6.7 6.8

23%25%

12% 11%

20%

0%1-2%

-5%

0%

5%

10%

15%

20%

25%

30%

0

1

2

3

4

5

6

7

8


Yo

Y G

row

th

Dom

estic s

ale

s (

in m

n)


39

Domestic sales - MopedsQ1 FY20P Q2 FY20P Q3 FY20P Q4 FY20P

(2)% (5)% 11% 8%


• Sale of mopeds registered a growth of 2% in fiscal 2019.

• Mopeds are expected to log a sluggish growth of 2-4% in fiscal 2020 due to lower rural sentiments.

0.72 0.75 0.72 0.89 0.86 0.88 0.91-8%

4%

-3%

23%

-3%

2% 2-4%

-10%

-5%

0%

5%

10%

15%

20%

25%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0


Yo

Y G

row

th

Do

me

stic s

ale

s (

in m

n)


40

Commercial Vehicles

41

Demand to remain robust across CV segments

NF: Not favorable, F: Favorable; N: Neutral

Variables (common factors across Commercial vehicles) FY 18 FY 19 FY 20P

Diesel prices N NF NF

Regulatory (BSIV to BSVI) N N F

Availability and cost of finance F NF N

Variables LCV FY 18 FY 19E FY 20P

Freight demand (LCV) – PFCE N F F

Replacement demand (LCV) F F F

Overall demand (LCVs) F F F

Variables MHCV FY 18 FY 19E FY 20P

Freight demand N F F

Industrial GDP N F F

Replacement demand F N N

NHAI Road Execution F F F

Impact of Axle load norms ----- NF N

Overall demand F F F


42

Freight rates on an downward trend due to falling diesel price

Note: Represent freight rate for a MCV truck, Diesel price per tkm is representative for a 10T payload with and fuel efficiency 3.5 kmpl


Freight rates Vs Diesel rates

Improved freight availability after GST

implementation helped transporters raise freight

rates to offset higher fuel costs.

A higher rise in diesel prices than in freight

rates has impacted transporter profitability in

the spot market

Excess capacity created in

market due to Axle norms

resulting fall in freight rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Apr-

17

Ma

y-1

7

Ju

n-1

7

Ju

l-1

7

Aug

-17

Sep

-17

Oct-

17

Nov-1

7

Dec-1

7

Ja

n-1

8

Fe

b-1

8

Ma

r-18

Apr-

18

Ma

y-1

8

Ju

n-1

8

Ju

l-1

8

Aug

-18

Sep

-18

Oct-

18

Nov-1

8

De

c-1

8

Ja

n-1

9

Fe

b-1

9

Average freight rates (R.H.S) (Rs/tkm) Average diesel prices (Rs/tkm)

Destocking before GST coupled with inability of the spot

market to retain efficiency gains led to low freight rates

43

Overview of end-use segments - Cargo

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20PSegments

(% Growth Y-o-Y)

Coal (Production)

Iron ore (Production)

Steel (Consumption)

Cement (Consumption)

Roads (Construction)

Consumer durables

(Consumption)

E-commerce

2

12.1

9

(15.4) 20.9 23.1 9.4

8.9

4

5 3 3 7-8

6-8

0.8

3.4

(34.4)

4.9

(3.2)

5.8

4.7

40.1

3.1

1.9

19

8.0

9.1

17.0

8.0

11.7

21

5-6

5-7

11-13

68 22 35 35-37 34-36

8.8 6.6


3.9

46 71

2 6.6 6.7 8-9 9-10

44

Regulations shaping commercial vehicle industry in India

2000 2003 2006 2009 2012 2015 2018 2021 2024

Indi

a

200

0

BS

II

BS

III

BS

IV

BS

VISpeed

Gov.

Airbag

ABS

O/L

Ban

Bus

Body

CodeFull

frontal

test

Exhaust

fan

Regulations without

implementation date

Next 5-6 years to see more

regulations

Axle

load


BS

VI B

45

Higher capacity utilization to help improve marginsUtilization levels on a rising trend Top players running on optimum capacity

Source: Crisil Research

PlayerEffective Capacity estimate

(as on 31st Mar 2019)Capacity utilization

Ashok Leyland 186500 89%

Eicher Motors 93000 94%

Tata Motors 762000 49%

Mahindra & Mahindra 292000 80%

Capacity additions

Player LocationCapacity

‘000 unitsInvestment Status

Ashok Leyland Ltd. Medak, Telangana 20 Rs 5 billion Planning

Ashok Leyland Ltd. Krishna, AP 4.8Rs 1.7

billion

Under

implementation

VECV Ltd. Bhopal, MP 40 Rs 4 billion Planning

Volvo Buses India

Pvt. Ltd.

Bengaluru,

Karnataka1.5 Rs 3 billion Planning

Sino Truck Medak, Telangana 1.45 Rs 1 billion Planning

Note : Capacity utilization is that of Tata Motors, Ashok Leyland, Eicher Motors and Mahindra &

Mahindra representing ̃90% of domestic sales


51%57% 59%

64%

79%

FY15 FY16 FY17 FY18 FY19

• Higher sales amid marginally higher capacity additions is expected

to aid capacity utilization levels, driving margins in fiscal 2020.

• The capacity utilisation of the top four players - Tata Motors

(standalone), Ashok Leyland, Eicher, and Mahindra & Mahindra -

which was at ~78-80% in fiscal 2019 and rise further to ~85% in

fiscal 2020.

• OEMs have already incurred capital expenditure for BS VI

transition and with an expectation of lowering of demand

sentiments from fiscal 2021 (owing to increase in price of vehicles)

OEMs are expected to go slow for any capacity expansion,despite high capacity utilization levels.

Source: Industry, CRISIL Research

46

CV financing to remain key monitrable as repo rate expands

CV interest rates and repo rates


0%

2%

4%

6%

8%

10%

12%

14%

Ju

n-1

3

Sep

-13

Dec-1

3

Ma

r-14

Ju

n-1

4

Sep

-14

Dec-1

4

Ma

r-15

Ju

n-1

5

Sep

-15

Dec-1

5

Ma

r-16

Ju

n-1

6

Sep

-16

Dec-1

6

Ma

r-17

Ju

n-1

7

Sep

-17

Dec-1

7

Ma

r-18

Ju

n-1

8

Sep

-18

Dec-1

8

Ma

r-19

Average repo rate Average Commercial vehicle Interest rate

Loan-to-Value for CV

78.6%

77.1%

73.9%

77.2% 77.2% 77.2% 77.2% 77.2%

84.4%

80.4%

78.9% 79.4%80.3%

81.2%82.0%

83.1%

68.0%

70.0%

72.0%

74.0%

76.0%

78.0%

80.0%

82.0%

84.0%

86.0%

FY13 FY14 FY15 FY16 FY17 FY18 FY 19 FY 20P

LCV MHCV

Source: SIAM, Crisil Research

47

CV finance industry hits road to recovery, to show robust growth in medium term

CV Disbursements


34

1

36

9

46

1

48

6

65

2

77

9

-24.6%8.2%

25.1%

5.3%

34.3%

19.5%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

0

100

200

300

400

500

600

700

800

900

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

CV Disbursements Growth Y-o-Y

Rs

Billi

on

CV Finance Penetration

96.6% 96.6%

96.0%

94.8%

95.5%

96.5%97.0%

97.4%

98.5%99.0% 99.0% 99.0% 99.0% 99.0% 99.0% 99.0%

92.0%

93.0%

94.0%

95.0%

96.0%

97.0%

98.0%

99.0%

100.0%

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY 20P

LCV MHCV


48

Commercial vehicles exports

Africa

16%

Asia

73%

Europe

1%

North America

1%

South America

4%

Middle East4%

Others 2%

NOTE: Latest numbers available for FY 2018 on DGFT

Source: Directorate General of Foreign Trade (DGFT), CRISIL Research

49

Domestic sales – LCV (<3.5T)


6% 12% 25% -7%


• Fiscal 2020 is expected to register a growth of 8-10% over a high growth of last two years.

• Higher incremental replacement demand (in comparison to fiscal 19) for pick up segment to support growth.

• Wide array of products are available in SCV (Small Commercial Vehicle) category. New players such as Maruti Suzuki, which entered the

segment in fiscal 2017, are expected to improve competition in the segment.

360 309 300 325 421 515 561

-18%-14%

-3%

8%

30%

22%

8-10%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

100

200

300

400

500

600


Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)


50

Domestic sales – LCV (3.5-7.5 T)



5% 3% 9% -26%

29.4 28.8 34.4 36.3 46.1 49.2 47.6

-24%

-2%

20%

6%

27%

7%

(2)-(4)%

-30%

-20%

-10%

0%

10%

20%

30%

0

10

20

30

40

50

60


Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)


• Low replacement demand is expected to drive down the sales in fiscal 2020

51

Domestic sales – MHCV (>7.5T)


• In fiscal 2020, increased Industrial output will support demand (Industrial GDP Growth – FY 19 – 7.7%, FY 20 – 7.9-8.3%)

• Demand from infrastructure and construction sectors is expected to remain strong post elections


-2% 9% 31% 2%

162 195 258 255 305 351 385

-27%

21%

32%

-1%

19%15%

9-11%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

50

100

150

200

250

300

350

400

450


Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)


52

Domestic sales – Buses


• Demand in fiscal 2020 to be driven by school and tourism segment. However, STU demand is expected to remain muted on account of lower

replacement and poor financial health of STUs.

• Advancement in purchases on account of BS VI implementation to support demand in fiscal 2020.


4% 4% 41% -23%

81.5 81.1 92.8 98.1 85.0 91.6 93.4

-14%

0%

15%

6%

-13%

8%

1-3%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

20

40

60

80

100

120


Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)


53

Tractors

54

Positive agriculture, commercial & finance scenario support to help growth

54

NOTE : *Assuming normal monsoon in fiscal 2020

Parameters Impact

FY 18 FY 19E FY 20P

Farm Income** F F N

-- Crop Prices F F N

-- Crop Output F F N*

-- Kharif Output N F N

-- Rabi Output F F N

Demand Indicators F F N

-- Infrastructure Development F F N

-- Sand Mining N F N

Supply side variables & financing F N F

-- Finance Availability F N F

-- Channel Inventory N N N

-- Player Action N N F

NF: Not favorable, F: Favorable; N: Neutral


55

Increased credit availability and lower interest rate is expected to impact tractor sales positively


Credit Availability for Tractors

4750 5750 7350 8000 8500 9000 10000 11000

6.3%

21.1%

27.8%

8.8%

6.3% 5.9%

11.1%10.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0

2000

4000

6000

8000

10000

12000

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

E

(%)(₹ Bn)

Agri Credit Growth

Bank Interest rate expected to remain lower

17.30% 17.20% 17.20%

16.80% 16.70%

15.90%

15.20% 15.30%

14.0%

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

FY 13E FY 14E FY 15E FY 16E FY 17E FY 18E FY 19E FY 20P


• Recent crisis in the NBFCs with regard to liquidity and hike in its interest rates have not affected the retail loan portfolios of NBFCs

• Also, captive financing is on an uptrend in the industry due to increasing penetration of Mahindra Finance, Escorts Finance in the tractor industry.

56

Improvement in Irrigation and rural income expected to have positive impact

Source: Department of Agriculture, Cooperation & Farmers Welfare, CRISIL Research

Irrigation spending on an uptrend at a faster pace

586 590 563659

804 827933

1030

11%

9%

-1%

4%

11%

14%12%

9%

-10%

-5%

0%

5%

10%

15%

0

200

400

600

800

1000

1200

FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19E FY 20P

Rs b

illio

n

Irrigation Investments Rolling 3-year CAGR

Rural Wages (Non-Farm)

169198

244

283299 312 325 332

0

50

100

150

200

250

300

350

FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19(Apr-Jan)

Average Daily Wages (in ₹.)

Rural wages includes general non-agricultural labour.


• Government’s renewed thrust towards improving the rural economy, via measures such as doubling farm income by 2022, increasing spend

towards irrigation, and improving crop productivity by distributing soil health cards is expected to drive growth in the long term.

• Growth in the average daily wage rate for rural labours has moderated since 2014, and this may result in slower migration of laborers to non-

farm employment

57

West region tractor sales remain flat in last five year due to draught condition in many areas

Segment-wise tractor sales Regional growth (5-year CAGR)


11.2% 10.9% 10.8% 9.3% 9.5% 9.5%

35.2% 36.6% 36.6%34.6% 35.8% 35.7%

48.8% 46.5% 45.9% 49.0% 47.2% 47.3%

4.9% 5.9% 6.6% 7.1% 7.5% 7.5%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Upto 30 hp 31-40 hp 41-50 hp 51 hp and above

16.1%14.7%

23.7%

19.2%

5.3%4.4%2.1% 0.2%

11.6% 12.1%

0%

5%

10%

15%

20%

25%

India - Overall North West East south

(%)

FY 09 - FY 14 CAGR FY 14 - FY 19 CAGR

• 41-50 hp segment has continued to maintain its dominant share due to its multiple applications in agriculture and haulage.

• Farm mechanization has been increasing in India, however its pace varies across regions. South and West has higher mechanization as compared to East and North-eastern states.


58

Capacity utilization is expected to increase in fiscal 2019


Utilization levels on a rising trend

PlayerEstimated capacity (in

Units)

Production (FY19 E)

(in units)


in FY19 E

M&M 376,000 338,236 90%

TAFE Ltd 198,000 200,400 101%

International Tractors 300,000 107,813 36%

Escorts Ltd 98,940 100,991 102%

John Deere 130,000 94,956 73%

New Holland Tractors 60,000 42,889 71%

SAME DEUTZ-FAHR 15,000 9,938 66%

VST Tillers and

Tractors Ltd137,000 8,451 23%

Force Motors Ltd 24,000 3,856 16%

Industry Total 1,256,940 916,150 73%

Top players running on optimum capacity

71%

60%

56%

66% 65%

73%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Source: TMA, CRISIL Research

59

Tractor Exports

Africa

27%

Asia

29%European Union

15%

North America

25%

South America

3%



60

Tractor exports to see a healthy growth in fiscal 2019 before moderating in fiscal 2020

Player wise market share of exports


Segment wise market share of exports


6%7% 7% 6% 8% 6% 5%

22% 23% 26%28% 30% 26%

69% 68% 67% 61% 60% 62%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Upto 30 hp 31-40 hp 41-50 hp 51 hp and above

21% 23% 27%15% 19% 22%

15% 15% 12%

16%16%

20%

24% 21% 22%

21%21%

19%

17% 19% 15%19%

18% 15%

13% 11% 12%15% 14% 12%

9% 12% 11% 14% 12% 13%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Johndeere International Tractors TAFE

Mahindra & Mahindra New Holland India others

• John Deere has been top exporter during this period followed by Mahindra & Mahindra. Exports grew in H1 fiscal 2019 on a low base. In H2 of fiscal 2019 export

volumes has however declined.

• In near term, the trade war between USA and China remains a key monitorable. Moreover, the prices of agricultural commodity has been lower in USA, which is

expected to impact the tractor demand.

• We estimate exports to grow at a moderate rate in long-term as Africa and Asia expected to remain the focal regions of long-term exports.

61

Domestic sales

509 599 729 787 810

18%

22%

8%

2-4%

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1000

FY 16 FY 17 FY 18 FY19 FY 20P

Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)

GrowthAbove Average Monsoon Normal monsoon Deficient Monsoon


-6% 4% 4% 12%


• Q4 of fiscal 2019 saw a fall in sales by 8% yoy due to lower rabi sowing area as compared to previous year and damage caused to crops mainly in southern states

due to Pethai cyclone.

• Due to lower rabi sowing area and monsoon in certain region, Q1 of fiscal 2020 is expected to fetch lower prices of rabi crops.

• In fiscal 2020, uncertainty due to elections and monsoon is a key monitorable.

62

Three-wheeler

63

Private consumption on an uptrend

Private final consumption expenditure (PFCE) to grow at 7.5-8% in FY20

Source: Ministry of Statistics and Programme Implementation (MoSPI), CRISIL Research

4.9 5.2 5.6 5.9 6.4 6.9 7.48.0 8.6

5.5%

7.3%

6.4%

7.9% 8.2%

7.4% 7.6% 7.5-8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

-

1

2

3

4

5

6

7

8

9

10

FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19E FY20P

Rs

. M

illio

ns

PFCE (LHS) PFCE Growth (RHS)

64

719767

812880 900

291334

381429

483

29% 30% 32% 33%35%

20%

30%

40%

50%

60%

0

400

800

2000 2005 2010 2015 2020P

Rural Population (in mn) (LHS) Urban Population (in mn) (LHS) Urban as % of total population (RHS)

Urban population to rise 2.4% until fiscal 2020

Urban areas to house 35% of total population by 2020

Source: United Nations, Department of Economic and Social Affairs, Population Division (2018)

• Between fiscals 2010 and 2020, the urban population growth is estimated to slow down marginally to 2.4% from 2.73% seen during fiscals

2000-2010

• Urbanization makes cities larger, pushing up motorization and economic growth that lead to better travel infrastructure boosting urban mobility

which is expected to drive the sales of three-wheeler passenger vehicles.

65

Future Demand Drivers

• Mahindra Electric recently launched lithium-ion battery powered electric three-wheeler, Treo range

• Piaggio is planning to launch fully electric three-wheeler by mid 2019.

• Atul Auto has entered into a joint venture with JBM Industries to develop the business of electric

auto rickshaws

• Bajaj is expected to launch electric three-wheeler under its sub-brand ‘Urbanite’.

• Government focus on rural roads construction

• Government relaxing permit regulations

• Traffic Congestion in urban areas along with the last mile connectivity

• Hub and spoke model is expected to increase cargo three wheeler sales

• Growth of E-commerce and their delivery setup to increase cargo three-wheeler sales.

66

Growth in disbursements shows promising picture for three-wheeler industry

Market size of three-wheeler financing


• The passenger segment accounts for 80-85% of disbursements.

• The market grew at 12% compound annual growth rate (CAGR)

between fiscals 2014 and 2019.

64 73 75 74 98 111

-9%

14%

3%-1%

32%

13%

-15.0%

-5.0%

5.0%

15.0%

25.0%

35.0%

0

20

40

60

80

100

120

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Three Wheeler Disbursement Growth YoY

(₹ BN)

Financiers Market share in FY 18 Rate of interest

NBFCs 85% 22-24%

Private sector banks 12% 15-16%

Public sector banks 3% 13-16%


Comparative of different financiers

• The three-wheeler financing market is catered by private

financiers only, with public sector banks having a negligible

presence in the segment.

• NBFCs dominate the market, because they give higher LTV

offerings to customers and have strong linkage with dealers which

help them in sourcing business

• Within non-banking financial companies (NBFCs), the captive-

financing arms of original equipment manufacturers (OEMs)

account for a significant market share.

67

Bharat Stage VI Norms : 1st April 2020

67

Note:CO: Carbon monoxide; HC: Hydrocarbon; NOx: Nitrogen oxide, PM: Particulate matter, PI: Positive Ignition, CI: Combustion Ignition, D.F.: Deterioration Factor

*OBD Stage will be applicable from 1st April 2023

Source: The Automotive Research Association of India (ARAI), CRISIL Research

Three-wheeler vehicles fitted with PI Engines

CO (mg/km) HC+Nox (mg/km) Nox (mg/km) EVAP (mg/test) OBD

Limit 440 435 130 1500 Stage I & II*

D.F. 1.2 1.2 1.2

Three-wheeler vehicles fitted with CI Engines

CO (mg/km) HC+Nox (mg/km) Nox (mg/km) PM OBD

Limit 220 200 160 25 Stage I & II*

D.F. 1.10 1 1 1.2

68

Three-wheeler exports

Africa

58%

Asia

23%

North America

2%

South America

10%

Middle East4%

Others 3%



69

Exports grown at a CAGR of ~10% from FY 14 to FY 19


Share of exports in total sales

58% 57% 57%65% 63%

55%

42% 43% 43%35% 37%

45%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY14 FY15 FY16 FY17 FY18 FY19

Domestic sales Exports

Bajaj dominates the share in exports from FY 14

Note : Exports of Bajaj Auto, TVS and Piaggio represents 98% of exports as of FY18


74% 70% 69% 70% 70% 67%

19% 22% 24% 21% 22% 25%

6% 7% 6% 6% 6% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

Bajaj Auto Ltd. TVS Motor Company Ltd. Piaggio Vehicles Pvt. Ltd.

70

Domestic sales – Three-wheeler Passenger


6% 6% 24% 4%

• Fiscal 2018 saw a growth of 29% on a low base of fiscal 2017 due to opening of permits in states like Maharashtra, Karnataka, Andhra

Pradesh and Delhi.

• Growth in fiscal 2020 is expected to continue. Tier II and III cities are expected to lead the growth of three-wheeler passenger vehicles.


385 432 441 402 517 572 630-13%

12%

2%

-9%

29%

11% 9-11%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

100

200

300

400

500

600

700


Yo

Y G

row

th

Dom

estic s

ale

s (

in '0

00

)


71

Domestic sales – Three-wheeler Goods


3% 7% 23% 4%

• Rural areas still prefer three-wheeler for the transport of goods due to lack of infrastructure.

• The shift from three-wheeler goods to SCV is expected to slowdown since much of the shift has already taken place.


95 100 97 110 118 129 140

-3%

5%

-3%

13%

8%9% 8-10%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0


Yo

Y G

row

th

Do

me

stic s

ale

s (

in '0

00

)


72

Inventory scenario

73

Inventory levels a concern across segmentsVehicle segment Normal inventory in days Current inventory levels Actions being taken

Passenger Vehicles 25-30 40-45OEMs offering huge discounts to bring

down the inventory levels

Two Wheelers 30-35 45-50

Various OEMs have announced

production cuts for Q1 of fiscal 2020.

Moreover, higher discounts in the form

of cashback and exchange offers are

announced by the dealers.

Commercial Vehicles 25-35 30-40

Inventory levels to remain unchanged

since players will try to grab market

share by pushing sales through

discounts and further pushing the

inventory.

Tractors 30-35 42-48

Inventory levels has increased as

compared to the last quarter, since

players are trying to gain market share

Three-wheeler 15-20 15-20 -

Source: Industry, CRISIL Research

NOTE: Inventory days for passenger three-wheeler is 10-20 days and for goods three-wheeler is 25-30 days

74

Thank you

For any further queries please contact:

Mr. Hemal N Thakkar & Ms. Aditi Mehta

Associate Director and Analyst – CRISIL Research

[email protected] / [email protected]

mailto:[email protected]

mailto:[email protected]

Documents

Impact of Macro-economic Environment on the Automotive Industry · 2019-06-14 · 7 IIP posts a meagre 0.1% growth on y-o-y basis IIP Exchange Rates Source: MoSPI, Crisil Research