Automotive Industry Overview
The auto industry produced a total 1.81 million vehicles, including passenger vehicles, commercial vehicles, three wheelers and two wheelers in February 2014 as against 1.73 million in February 2013, registering a growth of 4.41 per cent over the same month last year. The increase continues to be on account of growth in two wheelers production. Moreover, the overall domestic sales during April–February 2014 grew marginally by 2.68 per cent over the same period last year.
The passenger vehicles production in India is expected to reach 10 million units by 2020–21. The industry is estimated to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012–2021. In addition, the industry is projected to touch US$ 30 billion by 2020–21, according to data from Automotive Component Manufacturers’ Association (ACMA).
The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during the period April 2000 to January 2014 was recorded at US$ 9,344 million, an increase of 4 per cent to the total FDI inflows in terms of US$, according to data published by Department of Industrial Policy and Promotion (DIPP), Government of India.
The overall automobile exports grew by 6.39 per cent during April–February 2014. Passenger vehicles, three wheelers and two wheelers registered growth at 6.44 per cent, 16.40 per cent and 5.41 per cent respectively, compared to the same period last year.
During the last two major CV cycles, MHCV volumes clocked a CAGR of ~23% from the bottom of the cycle to the top. Freight rates, the key lead indicator of CV demand, have increased 5-6% since January 2014, driven by 20-25% increase in cargo flow of commodities. EBITDA during such recovery phase has grown at a faster pace, driven by operating leverage and enhanced pricing power. Even after assuming 20% CAGR in MHCV volumes on the base of FY14, FY17 volumes would be marginally lower than FY12 levels.
Given the difficult macroeconomic environment and challenges for the economy, CV companies have put in place various measures for prudent fiscal discipline across operations, while maintaining the required focus on the future in areas such as product development. Companies have been aggressively focusing on compressing costs as well as generating funds through divestment of non-core assets and investments to sail through the current downturn.
Auto Component Industry Overview
The Indian auto component industry is estimated to have a US$ 66 billion turnover by 2015–16 and is expected to grow at a 14 per cent compound annual growth rate (CAGR) by 2013–2021, according to Automotive Component Manufacturers’ Association of India (ACMA) – the nodal agency for the Indian auto component industry. In addition, industry exports are estimated to reach US$ 12 billion by 2015–16.
The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during the period April 2000 to January 2014 was recorded at US$ 9,344 million, as per data published by Department of Industrial Policy and Promotion (DIPP), Government of India.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), the domestic sales of automobiles during 2013–14 grew by 3.53 per cent over the same period last year. The automobile exports grew 7.21 per cent during the fiscal.
India has become a research and development (R&D) hotbed and in keeping with the global R&D trend of last year, the country is now a preferred destination for automotive R&D, according to a study on the Global Top 500 R&D spenders done by Zinnov. India’s position is highlighted by the fact that 874 MNCs have set up 1,031 centres and 45 per cent of the top 500 global R&D spenders have a presence here.