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Indian Automobile Industry Sector Report
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Indian Automobile Industry – FY15 Performance overview Sector Update
Domestic vehicle sales of Indian Automobile industry has been growing at CAGR of ~9.6% over the period of FY05-FY15 while exports have grown at a CAGR of ~18.9%. However, post the three consecutive years of strong double digit growth during FY10-FY12, the industry is struggling to reach even a low double digit growth rate. During FY13-FY15, domestic sales grew at a CAGR of just ~4.4% which was mainly driven by ~7.2% YoY growth in FY15. This weakness in demand for automobile vehicle in domestic market was mainly due to sluggish economic growth with subdued consumer sentiment due to rising interest rate and fuel prices.
Industry growing at slow pace over the past two to three years
Source: Bloomberg
Segmental performance – all the segments reported a positive growth except LCV In FY15, the domestic automobile industry grew by ~7.2% YoY as against ~3.6% in FY14 and exports grew by ~14.9% YoY during the year as compared to ~7.2% in FY14. In the first half of the year the total vehicle sales in India grew by ~13.8% YoY whereas in H2FY15 total sales grew by just 1.2% YoY. The higher growth in H1FY15 was mainly due to low base effect and reduction in excise duty benefit. However, poor monsoon and removal of reduction in excise duty benefit dampened the growth in H2FY15. Within the domestic market, Scooter and Medium and Heavy Commercial Vehicle (MHCV) segment grew strongly by 25.1% YoY and 16.1% YoY, respectively. However, Light commercial vehicle (LCV) continues to report negative growth and declined by ~11.6% YoY in FY15 as against a decline of ~17.6% in FY14.
Source: Bloomberg
Domestic passenger vehicle sales remained volatile during FY15 Domestic Passenger vehicle sales remained volatile during FY15 where passenger car segment grew by 4.8% YoY whereas Utility vehicle sales grew by 5.3% YoY. Growth in Passenger car sales in H2FY15 was marginally higher than in the first half. However, in Utility vehicle segment, growth dipped sharply in H2FY15 compare to H1FY15 due to high base effect and few new product launches. During the year within domestic passenger car segment, Maruti Suzuki’s passenger car sales grew higher than industry growth rate and thereby gaining market share. Total passenger car sales for the company grew by about 9% YoY. In Utility vehicle (UV) segment, Mahindra and Mahindra (M&M) retained its leadership position. However, due to absence in compact UV segment, M&M is losing its market share in the overall UV segment.
‐10.0%‐5.0%0.0%5.0%10.0%15.0%20.0%25.0%30.0%
0
5000
10000
15000
20000
25000
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Thou
sand
s
Growth rate improving for third straight year
Total Domestic sales in units YoY % Growth(RHS)
‐5.0%0.0%
5.0%
10.0%
15.0%
20.0%
25.0%30.0%
35.0%
0500
1000
1500
2000
2500
30003500
4000
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Thou
sand
s
Exports also rising for second consecutive year
Exports YoY % Growth(RHS)
‐10.0%‐5.0%0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%
Apr‐14
May‐14
Jun‐14
Jul‐1
4
Aug‐14
Sep‐14
Oct‐14
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
FY15 growth driven by H1 as H2 remained subdued
Domestic sales Growth (YoY %) Exports Growth (YoY %)
100.0%
9.5%2.8%
54.4%
22.8% 1.2%
1.9%
2.7%
0%
20%
40%
60%
80%
100%
120%
‐15%‐10%‐5%0%5%
10%15%20%25%30%
Total
Pass Cars
UVs
Motorcycle
Scoo
ter
MHC
V
LCV
3W
Scooter and MHCV grew strongly
FY15 Growth (YoY%) Segment contribution (RHS)
HDFC Bank Investment Advisory Group May 6, 2015
May 6, 2015
Source: Bloomberg
Scooterisation trend continues in FY15 Scooter continued to be the preferred choice for two wheeler (2W) buyers in FY15. Scooter sales grew by ~25.1% YoY as compare to ~2.5% YoY growth in Motorcycle sales in FY15, sixth straight year of double digit growth and outpacing Motorcycle sales since FY07. Scooter sales have been growing strongly over the past few years mainly due to its new age design which suits for both male and female riders, easy to handle as it is gearless and fuel efficiency. "Scooters are increasingly becoming a preferred choice for two-wheeler buyers as they provide certain benefits that a motorcycle cannot give like a relatively easy-to-drive option since most are gearless. The ease of drive makes it easy to zip across short distances and tight lanes," said Kamal Sharma, en executive with a top dealership of Hero MotoCorp. Source: Times of India Scooter segment sales have been higher than Motorcycle sales throughout the year in FY15 which resulted in increase in overall contribution of scooter in two wheeler sales. Honda Motorcycle & Scooter India (Pvt) Ltd and TVS Motors have gained market share in overall two wheelers segment on the back strong scooters sales during the year. Hero MotoCorp continues to be market leader in 2W segment. However, both Hero MotoCorp and Bajaj Auto has lost overall market share.
Source: Bloomberg
Strong revival in MHCV segment while LCV still struggling to make its mark During FY15, MHCV segment shown strong revival and grew by 16.1% YoY as against the negative growth in previous two years where it has declined by over 20% on YoY basis. On the other side, LCV segment consistently reportied negative growth throughout the year which resulted in a negative growth of ~11.6% YoY in its volume growth in FY15. MHCV segment started picking up mainly due to extension of exices duty benefit available till 9MFY15, recovery in mining activity, improvement in fright utilization levels and replacement of ageing vehicles in MHCV segment. Within MHCV segment Tata Motors continues to be market leader with minor loss in market share whereas Ashok Leyland gained market share in overall MHCV segment and maintained its second position due to strong growth in Goods Carrier segment.
Source: Bloomberg
‐20.0%‐15.0%‐10.0%‐5.0%0.0%5.0%
10.0%15.0%20.0%25.0%30.0%
Apr‐1
4
May‐14
Jun‐14
Jul‐1
4
Aug‐1
4
Sep‐14
Oct‐1
4
Nov‐1
4
Dec‐1
4
Jan‐15
Feb‐15
Mar‐15
(YoY G
rowth in %)
Domestic passenger vehicle sales remained volatile during FY15
Passenger Cars Utility Vehicle
‐20.0%
‐10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Apr‐14
May‐14
Jun‐14
Jul‐1
4
Aug‐14
Sep‐14
Oct‐14
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
(YoY
Growth in
%)
Domestic scooters sales growth outpaced motorcycle sales in FY15
Domestic Motorcycle Domestic Scooter
‐40.0%‐30.0%‐20.0%‐10.0%0.0%
10.0%20.0%30.0%40.0%50.0%60.0%70.0%
Apr‐1
4
May‐14
Jun‐14
Jul‐1
4
Aug‐14
Sep‐14
Oct‐1
4
Nov‐14
Dec‐14
Jan‐15
Feb‐15
Mar‐15
(YoY
Growth in %)
Strong demand in MHCV while LCVs struggled in FY15
MHCV LCV
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to drive the vhe segment intractors whichor monsoon simum supporrural dependweather monerror margin ocultural Costsy for major farddy farmers.
y to beneficia
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companies likck of new laumanagement,. This is withM has indicat
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a New mode
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May 6, 2015
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May 6, 2015
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