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India Autos Report Q4 2009
Market |
Automotive and Parts |
Report Type |
Market Research |
Country |
India |
Published |
18 September 2009 |
Number of Pages |
52 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Car sales in India rose 7.8% to 107,531 units, compared to 99,741 in June 2008
Tax breaks and other incentives are having the desired effect on the Indian automotive industry, as car sales achieved positive growth for the fifth consecutive month in June, according to the Society of Indian Automobile Manufacturers (SIAM). Sales rose 7.8% to 107,531 units, compared to 99,741 in June 2008.
A 22% increase in February marked the first uptick in monthly car sales since September 2008 and subsequent growth has been attributed to government stimulus packages and lower lending rates. Total sales for June reached 806,537 units, taking total passenger, commercial and two-wheeled vehicle sales for the first quarter of the current financial year to 2,572,137 units. This is in line with BMI's forecast for total sales of at least 9.9mn units for the year ending March 2010, which would represent growth of around 2% y-o-y.
The small car segment in particularly has continued to attract interest, with Toyota Kirloskar Motors announcing plans to increase the level of investment in its second plant from the original allocation of INR32bn (US$660mn) to INR40bn (US$824mn) by 2016. The first phase of the plant's construction is already underway near Bangalore, with a small car due to enter production in 2010. Honda Siel Cars India (HSCI), meanwhile, is to invest around INR16bn (US$334mn) in a new engine and car production plant. This will significantly raise the level of local content in its vehicles. Some INR10bn (US$209mn) has already been spent on the first phase of its construction with INR6bn (US$125mn) to be spent on the second phase. The company expects construction to take three years.
Despite the high levels of investment, India is now down to sixth in BMI's latest Business Environment Ratings with a slightly lower score of 55.4 from a possible 100, as a reduction in its country structure rating drags on the limits to potential returns category. India shares the same pros and cons as China, ranking highly in terms of high production and sales growth potential, but with a low score for country structure (again caused by a large gap between wealthy urban and poorer rural areas), which acts as a restriction on future penetration rates. However, the country's regulatory environment rating is bolstered by the government's efforts to encourage 'green' motoring, as well as a number of free trade agreements which are supporting the country's bid to become a regional export hub.
The small car segment features heavily again in the market's competitive landscape. Sales for June 2009 showed a leaning towards those manufacturers that have taken advantage of the preference for small cars with new model launches. Maruti Suzuki, which already dominates with a market share of over 50%, launched its seventh small car, the Ritz, in May and saw sales for June rise 12% to 54,693 units. Secondplaced Hyundai, which began production of the i20 small car exclusively in India in late 2008, recorded a 5.2% rise to 23,013, while Tata Motors in third sold 13,732 units, up 3.2%. The launch of the Nano in July will be reflected in Tata's next set of monthly results.
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