Vol.

-IX , Issue-2, Mar-Apr 2019

TRACTION
A Newsletter of
Automotive Tyre Manufacturers’ Association

Editorial
Inside This Issue
l Industry Trends
mTyre
mAuto
(Pg…2)
(Pg…3)
A fter a grueling elections
exercise spanning more than
a month, a full majority stable
Government is again poised to take
centre stage in India, the largest
index (WPI) stood at over 7% in April
Rural stress following weaker
monsoon last year is weighing upon
the economy. The demand growth for
mNatural Rubber (Pg…4) two wheelers fell below 5% in FY19
democracy in the world.
mNR Global (Pg…5) against almost 15% in the previous
l Country Focus (Pg…6-8) Amidst celebrations, the new scal. Uncertainty over the outcome
l Focus (Pg…9-11) Government has its task cutout on of the elections cast a shadow on
l Events (Pg…12-13)
the economic front. It is no-brainer investments and consumption was
that Indian economy is slowing down. hit by tight nancial conditions
l India Stats (Pg…14-15)
In the third quarter, the economy including high interest rates and
l Quotable Quotes (Pg…16-17)
grew at a six quarter low of 6.6%. stress amongst banks.
l China Column (Pg... 18-20) While we will need to wait till May 31
l Globe Watch (Pg... 21)
While there could be several factors
when the Government will release
for slowing economy, the new
l Stat-o-Sphere (Pg…22-23) GDP gures for the 4th quarter,
Government needs to continue with
International Monetary Fund (IMF)
the reform agenda. India's Chief
has estimated growth in FY19 at 7.3%
Economic Advisor has emphatically
down from 7.5% projected earlier.
stated that the new Government
World Bank has put it at 7.5% while
should bring down the cost of land,
Finance Ministry estimates have put
labour and capital for Indian
the entire year’s growth at 7% only.
companies and enhance their ability
India will continue to be the fastest
to compete globally.
growing major economy but the pace
is slackening. Union Budget making process has
IOCL Drivers Training on Tyre Safety The performance of Auto sector, the
begun in right earnest which will be
presented in July. All eyes will be on
bellwether of Indian economy
the Budget and the direction that it
provides insights in the economy
provides.
which is losing momentum. A glance
at the graphical presentation on Page Happy Reading!!
3 proves the point.
There are other worries too including,
but not limited to, rise in food
in ation and crude oil prices. Food Rajiv Budhraja
in ation based on Wholesale price Director General
Page 13
 Industry Trends - Tyre

Tyre Production - India All Figs in Lakh Nos

Apr'18-Feb'19 & YoY Comparison FY18 FY19

Truck & Bus tyre production which has been growing in double Motorcycle tyre production has
digits witnessed the growth dwindling in the rst two months weathered the slowdown and has
of Q4. continued to be ahead of the previous
19 70 year's curve.
15.81 190.89
(1%) (17%)
16 60 55.56
163.33 (3%)
15.72

13 50 53.88

10 2017-18 2018-19 40
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar (Apr-Feb) (Apr-Feb) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Passenger Car tyre production contracted in Nov'18 and has Overall tyre production has remained
continued to remain in the negative territory till Feb'19. in the positive zone, though the
growth has dwindled lately.
50
180

394.70
40 (1%)
35.43 389.06 160 145.60
(1%)
30 31.30
(-12%) 140 144.59

20
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2017-18 2018-19 120
(Apr-Feb) (Apr-Feb) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Tyre Exports - India

Apr-Dec’19 & YoY Comparison

Truck & Bus tyre exports shot up signi cantly in Feb'19

having dropped in the previous month.
3.0

2.5
2.01 21.25
(33%) 20.84 (2%)
2.0
In number terms, overall tyre
1.5 1.51
exports went up marginally in the
1.0 Apr-Feb FY19 Period.
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2017-18 2018-19
(Apr-Feb) (Apr-Feb) 96.87
(1%)
96.16

Continuing its declining trend, Passenger Car tyre exports nosedived

in Feb'19 and stood lower by 20%.
2017-18 2018-19
3.5 (Apr-Feb) (Apr-Feb)
3.0
2.54
2.5 26.81
2.02 27.86 (-4%)
2.0
(-20%)
1.5
1.0
0.5
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2017-18 2018-19
(Apr-Feb) (Apr-Feb)

Note: Figs in brackets indicate % change YoY

1
2
 Industry Trends - Auto

Vehicle Production - India

Apr-Mar FY19 & YoY Comparison

Having grown in high double digits in the rst half, All Figs in Lakh Nos.
M&HCV production growth slackened in the second half FY 18 FY 19
50000 of FY19 in part due to the base effect.
0.43 29%
40000 LCV production has mirrored the
4.44
0.42 growth pattern in M&HCVs.
(-3%)
30000
3.45

100000
20000

80000
0.63
10000 FY18 FY19 (2%)
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 60000
0.62

40000

Passenger Vehicles growth remained in negative territory in 4 20000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
out of the last 6 months in the second half of scal year 2018-19.
400000
3.66
0.1%
40.20 40.26
3.35
(-9%)
300000

200000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY18 FY19

+ Including P. CAR, MUV/SUV/VANS.

Motorcycle production, which has maintained a steady growth over

previous year witnessed a sharp contraction in March'19.

9%
165.03
1600000
151.67
13.84 Contraction in Scooter
1300000 segment that began in Dec'18
12.00 deepened in Mar'19 with 38 fall
(-13%)
1000000
in production.
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY18 FY19
1000000

800000
7.40
Tractor segment that has grown in double digits all through
the year marched in negative territory in Feb and ended the 600000

year with 23% de-growth. 4.60

400000
(-38%)
100000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
14%
90000
8.98
7.91
80000
0.75
70000

60000
0.58
(-23%)
50000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY18 FY19

Note: Figs in brackets indicate % change YoY Unit(s): 1 Lakh = 100,000; 10 Lakhs = 1 Million; 100 Lakhs/10 Million = 1 Crore.

3
 Industry Trends - NR India

Natural Rubber - INDIA All Figs in MT

Apr'18-Mar'19 & YoY Comparison FY 18 FY 19

Sharp contraction of 33% in the month of March'19 deepened the de-growth in

NR production to 7% in FY 2018-19.
80000

60000
-7%
45000 694000 642000
40000

30000
(-33%)
20000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY18 FY19

NR Consumption remained steady and reverted to one lakh tonne gure in March.

9%
110000
1211940
103000 1112210
100000
100000
(-3%)
90000

80000

70000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY18 FY19

NR Imports stood lower than previous year in the last quarter of FY19.
NR Exports continue to be modest.
Import Export
70000 3000

60000
2000
50000
48699

40000 605
1000
(3084%)
37191
30000 (-24%)
19
20000 0

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

NR Stock at the end of Mar’19 stood lower Average NR price stood higher in
at 287000 tonnes. Mar’19 YoY.
Stock 160 NR (RSS-4) Price
300000
292000
287000
(-2%) 140 128.02
(2%)

120 125.57
250000

100

80
200000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Note: Figs in brackets indicate % change YoY

4
 Industry Trends - NR Global

Global NR Overview (ANRPC* Countries)

All Figs in ‘000 Tonnes
Jan-Feb’19 & YoY Comparison 2018 2019

NR Production in ANRPC countries stood lower than previous year in the rst
two months of 2019 calendar.

('000 T)
1300

-6%
2269
2138
1100
1067
1051
(-1%)
900

2018 2019
700 Jan-Feb'18 Jan-Feb'19
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

NR Consumption stood at the same level as previous year with two curves
overlapping in the rst two months.
('000 T)
1300

-0.1%
2176 2173
1100
1040
1028
(-1%)
900

2018 2019
700 Jan-Feb'18 Jan-Feb'19
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

NR consumption in India went up marginally while the same

remained unchanged in China in the rst two months.

NR Consumption YoY (INDIA vs. CHINA)

India China
0.2%
1% 197 836
195 834

Jan-Feb'18 Jan-Feb'19 Jan-Feb'18 Jan-Feb'19

Figs in brackets '()' indicates % change (YoY).

*ANRPC - Association of Natural Rubber Producing Countries
(Member countries : Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Philippines, Singapore, Sri Lanka, Thailand & Vietnam)

5
 CountryFocus

Country Focus: Indonesia

Indonesia Automotive Industry

Production Installed Capacity Number of

(2018) (2018) Employees

1.34 2.25 1.5

Million Units Million Units/Year Million People

Investment Indonesia's Automotive

Car Ratio
(2014-2017) Industrial Areas in:
87 Bekasi
27.3 Cars per Karawang
Trillion IDR 1000 people Purwakarta

The investors are from:

$ 900
million
investment to enter
Indonesian and Asia
automotive Europe
industry

6
 CountryFocus

Country Focus: Indonesia

Production of Vehicles 000’ units

1,056
1,013

982
968
925

824
745
562
497

308

288
285
282
276

274

234
206

2010 2011 2012 2013 2014 2015 2016 209 2017 2018

Car Commercial Vehicles

000’ units
Domestic Sales of Vehicles
Motor Vehicle Motorcycle
8043

7867
7771
7398

7141

6480

6383
5931

5886
1116

1229

1208

1013

1061

1079

1151
764

894

2010 2011 2012 2013 2014 2015 2016 2017 2018

7
 CountryFocus

Focus on Exports
l According to the Association of Indonesian Automotive Manufacturers, the export of completely

built units in 2018 was recorded at 264,553 cars, a 14.4 % increase from the export number in

2017, while the export of completely knocked-down cars grew 6.6% to 86.6 million.

l In 2019, Indonesia targets 450,000 car export.

l Government expects that CBU can hold 95% by the easing of automotive export procedures. While

last year, Indonesian vehicles export was 346,000 units, which consists of 76% CBU and 24%
completely knock down (CKD).
l Indonesian export destinations are Philippines, Saudi Arabia, Cambodia, Vietnam, and some Latin
American countries.
l Indonesian government’s steps in easing automotive export procedures is expected to speed up the
growth of the industry.
l By the procedure simpli cation for completely built-up (CBU) vehicles export, the country aims to

get almost 20% of CBU export increased this year.

Car Exports
2018 2019 (Target)

346000 450000

Outlook 2019
Posi ves Concerns
l Strengthening private l Automotive industry to experience
consumption, helped by stagnant growth amid high loan
government election-related interest rates, and docile in ation
spending, to help drive growth in and stagnant purchasing power
Indonesia's new car market in 2019

l Rupiah volatility, and uctuating oil

l Improvements in Indonesia's key prices.
export markets

l The development of Indonesia's l Global economic uncertainty with

electric vehicle (EV) and the ongoing United States-China
SUV production sub-segments will trade war
accelerate as the global demand for
these vehicles continue to expand.

8
 Focus

J.D Power 2018 India

Two-Wheeler Initial Quality Study (2WIQS) Study

The 2019 India Two-Wheeler Initial Quality Study (2WIQS) is based on

evaluations from 8,905 owners who purchased a new two-wheeler vehicle
between March 2018 and October 2018. The study includes 85 two-
wheeler models from nine makes. The study was elded from September
2018 to December 2018 in 45 cities across India.

The study measures problems owners experienced with their new two-
wheeler during the rst two to six months of ownership. It examines 147
problem symptoms in seven categories (listed in order of frequency of
reported problems): engine; brakes; t and nish; lights/ electricals; ride
and handling; transmission; and gauges and controls.

Top 3 Two-Wheelers per Segment in 2019 Initial Quality Study

(Problems per 100 vehicles (PP100); lower score re ects better quality performance)

Honda Ac va i 86
Scooter Segment Scooter Segment
Execu ve

Hero Pleasure 112

Yamaha Fascino 114
Average 132
Suzuki Access 125 94
Upper Execu ve

Average 125
Honda Ac va 125 129
Honda Grazia 137
Hero HF Deluxe/Eco/I3s 104
Motorcycle
Economy

Segment

Bajaj Discover 110 108

Hero Splendor+/I3s 108
Average 119
Honda CB Shine 115
Motorcycle
Execu ve

Segment

Honda CB 125 Shine SP 116

Hero New Glomour/FI 139
Average 142
Yamaha FZ/FZS 108
Upper Execu ve
Motorcycle
Segment

Bajaj Pulsar 150 112

Average 125
Honda CB Unicorn 156
Yamaha YZF R15 86
Motorcycle
Premium

Segment

TVS Apache RTR 160 4V 108

Honda X Blade 113
Average 129

Only top 3 vehicles per segment are shown.

9
 Focus

J.D Power 2018 India

Two-Wheeler Initial Quality Study (2WIQS) Study
Study Leaders
Score
Segment Highest Ranking Vehicle
(PP100)

Execu ve Scooter Segment Honda Ac va i 86

Upper Execu ve Scooter Segment Suzuki Access 125 94
Economy Motorcycle Segment Hero HF Deluxe/Eco/I3s 104
Execu ve Motorcycle Segment Honda CB Shine 115
Upper Execu ve Motorcycle Segment Yamaha FZ/FZS 108
Premium Motorcycle Segment Yamaha YZ R15 86

Key Findings

Design quality improvement lags manufacturing
quality:
While problems related to manufacturing quality have
declined by 29 PP100 between 2015 and 2019, problems
related to two-wheeler design have only declined by 12
PP100 in the same period.
Younger two-wheeler buyers experience more initial
quality problems:
Almost one-third (32%) of recent two-wheeler buyers
are 25 years of age or younger. These buyers cite a
higher number of problems than those in the mature
age group of 31 years of age or older (132 PP100 vs. 125
PP100, respectively). The difference is largely in uenced
by problems experienced in the brake category.

Increasing internet usage elevates instances of
shopping around before nal purchase:
Internet usage as a pre-shopping tool has increased to
20% in 2019 from 16% in 2018. Cross-shopping rates
among buyers who used the internet as a pre-shopping
tool were more than two times higher than among
those who did not (31% vs. 13%, respectively).
Overall two-wheeler quality in uences advocacy:
Owners who experience fewer problems than expected
are more than two times more likely to recommend their
two-wheeler model to family and friends, compared
with those owners who experience more problems than
expected (63% vs. 25%, respectively).

10
 Focus

J.D Power 2018 India

Two-Wheeler Initial Quality Study (2WIQS) Study

Key Findings

! !

Initial Quality problems higher if distance travelled is
>3,500km:
Instances of initial quality problems are 40% higher (an
increase of 45 problems per 100 vehicles, or PP100)
among owners who reported having travelled more
than 3,500 kilometers on their newly purchased two-
wheeler compared to owners who travelled 3,500
kilometers or less.
Manufacturing/Supplier related Quality problems
higher if distance travelled is >3,500km:
Manufacturing/ supplier quality-related problems are
higher by 30 PP100 among owners who reported
having travelled more than 3,500 kilometers as
compared to owners who travelled less than 3,500
kilometers. Whereas this difference is less (13 PP100)
when it comes to design-related problems. A lower
PP100 score re ects better quality performance.

“
Deteriorating product quality can detract from customer satisfaction
and con dence in the two-wheeler model across the entire
ownership period. As the industry will soon be going through a
paradigm shift in technology in order to meet the BS-VI emission
norms as set by the Government, OEMs can also focus on addressing
concerns around sustained product quality to gain from improved
word-of-mouth recommendations.”

- Rajat Agarwal, Two-Wheeler Industry Expert, J.D. Power

11
 Event

MA-ITTAC
AT

def'kZ;y Mªkboj Vªsfuax izksxzke Manufacturers’

IOCL Drivers Training on Tyre Safety

K icking off the Tyre Safety calendar

for FY 2019-20, Automotive tyre
Manufacturers Association (ATMA)
held tyre safety training for Commercial
Drivers linked to Indian Oil Corporation
Tikri Kalan Terminal.
Drivers and helpers (cleaners) linked to
IOCL supply chain participated in the
training programme.
Training was conducted in two sessions
and total participation was 250 (1st
session 150 and 2nd session 100).
Especially in a commercial vehicle, tyres
account for signi cant amount of cost of
ownership. Vehicles getting stranded
due to worn out tyres retard the
competitiveness of transport sector. It is
therefore very important to sensitize
commercial drivers on Tyre Care & Safety.

12
 Event

Automotive Tyre
Manufacturers’ Association

Tyre Safety Pledge Station for senior citizens

18th April 2019

Over 200 members belonging

to Dignity Foundation, an
NGO helping senior citizens
live a life of dignity, took a
pledge to spread the
message of Road & Tyre
Safety. Senior citizens from
Delhi NCR region assembled
at Bipin Chandra Pal
Auditorium New Delhi
showed their commitment by
holding placards on tyre/
road safety and enlisting
themselves as ambassadors
of road and tyre safety.

“The movement for road safety needs to be

escalated for perceptible drop in road
mishaps so as to bring down the number of
causalities. We are targetting age groups
from 8 to 80 for spreading awareness on
Tyre care & safety. Having started school
connect program for sensitizing children on
road safety , we have reached out to Dignity
Foundation, urging elderly in the society to
be ambassadors for tyre safety”, said Mr
Rajiv Budhraja, Director General, ATMA.

“We are happy to associate with a worthy cause of

Tyre care & road safety. What better mission than
to spread the message of safety in the society and
build a safer, happier India”, said Mr Vijay Pahwa,
Gurugram Advisory Council of Dignity Foundation

13
 India Stats

India Stats
India registers highest CO₂ emissions

CO₂ Emissions
(2018 YoY% increase in CO₂ emissions)

4.8%

3.1%
2.5%

-1.5%
India USA China EU

India’s carbon dioxide (CO₂) emissions are growing at a faster rate than in any other
major energy-consuming nation. In 2018, CO₂ emissions in the country rose 4.8% from
the previous year. But despite this growth, per capita emissions in India remain low
at only 40% of the global average. Even in absolute terms, the rise in India’s CO₂
emissions trails that of the US and China. Emissions from India accounted for 7% of
the global CO₂ burden in 2018, compared with the US’s 14%

Solar Electricity generation up

Solar power generation in India has increased
Solar Electricity genera on up
substantially over the past few years. According to the
34% YoY in Q1, 2019
(Solar Electricity generated in Billion Units)
data released by the Central Electricity Authority
(CEA), solar power accounted for over 11.4 BUs of
11.4
(34%) electricity produced in Q1 2019. This marks a
growth of 34% year-over-year (YoY) from the 8.5 BUs
8.5 generated in the Q1 2018. Even though renewable
capacity additions are growing at a rapid pace, due to
its lower capacity factor, the actual electricity
generation tends to be much lower compared to
nuclear, coal or a gas power plant.

Q1, 2018 Q1, 2019 Even with all the new solar and wind installations,
renewables still barely make up 10% of the total
energy generation in the country showing how far
the country has to go before renewables start making
a dent in the carbon emissions

14
 India Stats

India Stats

Internet Users

Internet Users in India to touch ~630 million in 2019

(million no.)
627
566
480
337
315 (7%)
(7%)
294

251 290
185 (35%) (16%)

2017 2018 2019(P)

Rural Urban

% Share of Rural internet users to increase to ~46% in 2019

61% 56% 54%

39% 44% 46%

2017 2018 2019(P)

Rural Urban

India's internet users are expected to register double digit growth to reach 627
million in 2019, driven by rapid internet growth in rural areas, as per market
research agency Kantar IMRB. Internet usage in the country has exceeded
half a billion people for rst time, pegged at 566 million in 2018, driven by
rural internet growth and usage.
While internet users grew by 7 percent in urban India, reaching 315 million
users in 2018, digital adoption is now being propelled by rural India,
registering a 35 percent growth in internet users over the past year.
It is now estimated that there are 251 million internet users in rural India,
and this is expected to reach 290 million by the end of 2019. The share of
Rural Internet users in India has increased from 39% in 2017 to an estimated
46% in 2019.

15

Quotable Quotes
It is absolutely impossible to say that seven per cent of
growth happened without any job creation or
increase in employment opportunities. If one looks at
our analysis, the number of schemes launched, and
keeping all the other factors in mind, there has been a
continuous process of job creation. Our country`s
ambition should be of achieving 10 per cent growth
when we will reach this level we will be able to lift up a
maximum number of people above the poverty line.
-Amitabh Kant
CEO, NITI Aayog
If the economy grows mobility will increase and if
mobility increases, the economy will grow. There is
large headroom for growth in India. However there
are three major challenges facing the auto and tyre
industry – energy security of the country,
environment issues and the challenge of the 'Make
in India' campaign. The auto & tyre sectors need to
collaborate in meeting all the three challenges.
-Vikram S. Kirloskar
President,
Automotive Research Association of India (ARAI),
and Vice Chairman, Toyota Kirloskar Motor
16
Quotable Quotes
The auto industry is going through tremendous
changes and therefore the bonds between auto
OEMs and the tyre industry become all the more
important. There are new concepts such as
electric vehicles, connected vehicles, shared
vehicles and autonomous vehicles, all being
talked about and being visible in different parts of
the world. Against this backdrop it is more
important for us to partner even closer, develop
technologies closely and work and think together
as to how we can convert these changes into
strong opportunities for the entire value chain
-Anant Goenka
MD, Ceat
(& Immediate Past Chairman, ATMA)
Slowing demand and the ability to keep the cars
connected, even when it is with the user, opens
up options for selling, leasing or other ways of
allowing customers to experience the car. E-SIM
enabled connectivity also allows to remotely
monitor the vehicle usage pattern and
accordingly optimise nancing and insurance
expenses. With 5G technologies coming in,
pushing more digital content and content
monetisation will become game changers.
-Rahul Mishra
Principal, A.T. Kearney

Quotable Quotes
Entry level car buyers are very price conscious and
due to narrowing fuel price gap between diesel
and petrol vehicle, break even level for owning a
diesel car has already increased over last two years
and it will increase further post BS-VI transition.
Intra-city taxi segment which traditionally runs on
diesel is also gradually moving towards CNG
vehicle due to lower running cost, thereby further
accentuating decline in share of diesel powered
small cars.
-Ashish Modani
Vice President and Co-Head,
Corporate Ratings, ICRA
India has the fastest growth among G20
economies…Accommodative monetary policy
and additional scal support will boost economic
growth despite subdued demand from partner
countries. This contrasts with the Chinese
economy, which faces the double whammy of a
trade war with the US, and waning economic
stimuli. There are signs of a slowdown including
the weakening of private investment, in particular,
real estate investment.
Organization for Economic
Cooperation and Development (OECD)
17
Quotable Quotes
The ongoing elections has subdued the purchase
sentiment during April. This, according to us, is a
temporary phenomenon. We believe, following
the elections the auto industry will see a revival in
consumer demand. Supported by a normal
monsoon, we are con dent of seeing higher sales
in FY20.
-Rajan Wadhera
President - Automotive, M&M
While the past few years' average growth of
around 7.5 percent was impressive, the
expectation is India can be better. India is
expected to post real economic growth of 7.2
percent in the 2019-2020 scal year, and is seeing
below-target in ation even as rising oil prices add
an upside risk. If there is a temporary spike of oil
prices and again it comes down, then obviously
the impact gets moderated. Sustained increase in
crude prices will de nitely have an impact on
in ation, but we have to see how sustained it is.
Our priority is to remain watchful and take
coordinated action to revive growth, and maintain
macroeconomic, nancial and price stability.
-Shaktikanta Das
RBI Governor
 China Column

Across the Great Wall

China's foreign trade up 4.3% in rst four months of 2019

China's foreign trade of goods climbed 4.3 percent year-on-
China's Forein Trade, Jan - Apr 2019 year in the rst four months of this year to 9.51 trillion yuan.
(trillion Yuan)
9.51 Exports increased by 5.7 percent year-on-year to 5.06 trillion
9.11 (4.3%)
yuan during this period, while imports went up by 2.9 percent to
4.45 trillion yuan, as per the General Administration of Customs
4.45
4.32 (2.9%) (GAC).
Trade surplus rose by 31.8 percent to 618.17 billion yuan
during this period.
5.06
4.79 (5.7%) April trade expanded by 6.5 percent to reach 2.51 trillion yuan.
Exports grew by 3.1 percent in yuan terms last month, while
imports jumped by 10.3 percent.
Jan-Apr, 2018 Jan-Apr, 2019
Imports Exports Trade surplus stood at 93.57 billion yuan in April, shrinking by 43.8
percent year-on-year.
General trade grew faster than processing trade during the
Jan-April period, which also saw an increasing share in China's total trade volume.
Exports of mechanical and electrical products, as well as labor-intensive products such as textile and
furniture, maintained growth in the rst four months of this year.
The European Union was China's largest trading partner during this period, followed by the ASEAN, the
United States and Japan.
Trade with Belt and Road countries totaled 2.73 trillion yuan, up 9.1 percent year-on-year, more than
doubling the overall pace.
China's private rms reported faster trade growth, expanding at 11 percent year-on-year to reach 3.9 trillion
yuan during this period, as per GAC.

60% of Chinese companies see Net Pro t growth in 2018

Nearly 60 percent of Chinese companies saw net pro t
~60% of Chinese cos. registered a growth last year, and about 11.29 percent of them achieved a
YoY inc. in Net Pro t in 2018. more than 100 percent increase, as per the China Securities
(no. of companies) Journal.
About 1,988 companies' net pro t attributable to shareholders of
the parent company increased on a yearly basis in 2018,
YoY decline in according to annual reports from 3,400 companies listed on the
Net Profit YoY inc. in
Net Profit
1402
1998
Shanghai and Shenzhen stock markets.
41%
59% Around 976 companies' net pro t growth rate surpassed 30
percent, and about 384 companies' net pro ts increased more
than 100 percent in 2018, as per statistics.
3,400 companies listed on the Total operating revenue of the 3,400 companies reached
Shanghai and Shenzhen stock markets.
43.91 trillion yuan ($6.52 trillion) in 2018, up 12.79 percent
year-on-year. Net pro t attributable to shareholders of the
parent company increased 2.67 percent year-on-year to 3.45
trillion yuan in the same period.
The net pro t increase rate of industries including construction materials, petroleum, petrochemicals, steel,
iron, food, beverage and retail, increased more than 15 percent last year.
The Bank industry's net pro t increased 5.5 percent to 1.47 trillion yuan in total volume in 2018, accounting for
about 40 percent of A-share companies' total net pro t.

18
 China Column

“
20% Cos. registered >100%
The performance of big companies was good but some
inc. in NP, 50% >30% inc. YoY
small and medium-sized companies didn't fare very
(no. of companies)
well due to downward economic pressure in 2018.
However, with the implementation of policies to cut
taxes and fees, the overall performance of small and
medium-sized companies is expected to improve in YoY inc. in NP
2019” <30%, 638 YoY inc. in NP
32% >30%, 976
- Yang Delong, Chief Economist, Shenzhen-based First 49%
Seafront Fund YoY inc. in NP
>100%, 384
19%

Companies that doubled their net pro t in Q1 this year were mainly in segmented industries
including mechanical equipment, ne chemicals, computers, electronics, aquaculture and
brokers.
The performance of the breeding and consumption sectors will improve this year; bene ting from
5G commercialization, the pro tability of the electronics sector will increase and the new energy
automobile industry will have more room for development, as per experts.
About 3,627 companies are currently listed on the Shanghai and Shenzhen stock exchanges, with
1,468 on the former and 2,159 on the latter, according the exchanges' official websites.

China's Manufacturing remains in expansion territory

The growth of
China's Manufacturing PMI manufacturing activity in
54
China eased in April but
remained within expansion
52
territory, adding to the
con dence that the country's
50
economy is stabilizing.
48 The purchasing managers
index for the country's
46 manufacturing sector came
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr in at 50.1 in April, slightly
2018 2019 down from 50.5 in March, as
per the National Bureau of
Statistics.
A reading above 50 indicates expansion, while one below it re ects contraction.
Factory activity continued a steady expansion in April, with the subindexes for production
and for new orders standing respectively at 52.1 and 51.4. The readings are slightly lower than
those in March, but they are higher than the average performance of the rst quarter.
Market demand is driving a stable growth in production adding strong growth in emerging
industries, such as high-tech and equipment manufacturing, also contributed to the steady
performance.

19
 China Column

China set to be engine of global luxury spending: McKinsey report

China is set to be the engine of global luxury spending, with young

Luxury Spending by Chinese consumers consumers powering the strong growth, according to a report y by global
(US$bn) consultancy McKinsey & Company.
178
China delivered more than half the global growth in luxury spending
2X ase
re from 2012 to 2018 and is expected to deliver 65 percent of the
Inc
world's additional spending by 2025, according to the 2019 McKinsey
China Luxury Report.
89
Chinese consumers are forecast to almost double their current luxury
spending to 1.2 trillion yuan ($178 billion) by 2025, accounting for 40
percent of the world's spending, the report said.
It noted that young Chinese consumers are reshaping global luxury.
2018 2025F China has 16.9 million luxury consumers born in the 1980s and
1990s. They make up 71 percent of the country's total luxury
consumers and account for 79 percent of the total luxury spending in
2018, according to the report.
The majority of these young consumers are fresh to the market, presenting both a tantalizing opportunity and an implicit
imperative for brands to stay current, the report said.
Consequently, opportunity abounds as brands seek to engage the attention of consumers in the world's most lucrative and
fastest-growing luxury market.

Quickly...

Chinese mergers, acquisitions contracted in 2018

The outbound pace of
Overeas M&A by Chinese cos Chinese companies slowed
down last year, with total
500 143 160
value of their overseas
140
400 110 mergers and acquisitions
No. of M&A deals

120
(-23%)
Value (US$bn)

300 100 contracting 23 percent year-

80 on-year to reach 738 billion
200 400 60
323 yuan ($110 billion) in 2018,
(-19%) 40
100
20
according to the Hurun China
0 0 Cross-border M&A Report /
2017 2018
The report was jointly released
No. Value by Shanghai-based Hurun
Research Institute and the
cross-border investment
specialist DealGlobe. It is the third year in a row the two have made the report.
A total of 323 overseas M&A cases were registered last year, while the number was 400 in
2017. The value of the 50 largest M&As decreased 30 percent year-on-year to 560 billion yuan,
a 53 percent drop from 2016.
The largest M&A case came from China Three Gorges Corporation, which spent 180
billion yuan to acquire a 100 percent stake in the Portuguese power company Energias
de Portugal.

20
 Globe Watch

Globe Watch
Highways England starts live test to reduce CV Tyre failures
Highways England is undertaking live tests of a technology that
could help reduce commercial vehicle tyre failures by 75% on UK's
strategic road network (SRN). The technology is a drive over tyre
pressure, tyre tread and vehicle weighing system. As drivers
approach the sensors, an ANPR (automatic number plate recognition)
camera reads and records the vehicle registration and a second camera
photographs the vehicle.
The purpose of the equipment is to provide information to the driver
or the eet or transport manager, and not to say whether the
vehicle is or is not roadworthy. Having rst assessed a pilot
installation of WheelRight's drive-over tyre management system at Keele Services (M6 southbound), Highways England
is now running year-long tests of the technology at three locations in the UK.
“These three pilots put the UK at the forefront of the transport industry, setting new safety standards that other road
management bodies and transport planners across the globe will be keen to adopt.” - John Catling, CEO, WheelRight
The WheelRight system comprises a set of high-intensity strobe lights, all-weather cameras and drive-over pressure
instruments installed at the transport depot – all collecting data within seconds. This information is then analysed to
provide actionable results instantly to the driver and/or eet manager. Daily and weekly reports include data on:
l Tyre pressures (pass or fail based on predetermined levels)
l Tread depths (pass or fail based on speci ed levels)
l Tyre temperatures (early identi cation of problem tyres or wheels)
l Tyre condition (via a 360 degree photographic image of the tread)
l Weigh in Motion data / axle weights

Mitcham, Australia sustainably improving road conditions with end of life Tyres
A South Australian council is working on an innovative new road
surface to deliver a highly sustainable solution for developing its
infrastructure.
The Australian transport industry is likely to see substantial
bene ts from an increase in the use of crumbed rubber in local
roads according to Tyre Stewardship Australia.
The City of Mitcham, in South Australia, is working with Tyre
Stewardship Australia, an industry body devoted to tackling the tyre
recycling challenge, testing recycled crumbed rubber in asphalt.
This is known to deliver more durable and safer roads and generate less noise for neighbouring communities.
To date, a stretch of 335 metres of this innovative road surface has been laid in the municipality and is currently
undergoing rigorous durability and performance testing.
As part of the evaluation, a range of factors such as cracking, rutting, moisture retention and longevity will be
assessed. These factors directly impact both safety as well as vehicle maintenance costs – and crucial downtime
for up tempo transport operations.
Only 10 per cent of the 56 million end-of-life tyres Australians generate each year are currently recycled
domestically. The successful outcome of this test, it is anticipated, will potentially increase the use of this type of road
surface nationwide.
The City of Mitcham has used approximately 850 end-of-life tyres in the asphalt resurfacing of Stanlake Avenue.
Almost two end-of-life passenger car tyres were used for every tonne of asphalt laid in a demonstration that
presented no workability or fuming issues, despite a high ambient temperature on the day.

21
 Stat-O-Sphere

Stat-O-Sphere

Natural gas vehicles (NGVs) are likely to account Travel and tourism industry contributed a
for 50% of sales of new three- and four- tenth of India's GDP in 2018 and accounts for

wheelers in India by 2030, on the back of rapidly 42 million jobs in the country, according to a
developing infrastructure and cost reduction joint report by FICCI-Yes Bank. In India, over
due to domestic manufacturing, according to a Rs 16 trillion were created by this sector
report 'Transforming Mobility Through Natural
alone. The same is expected to double by
Gas' by Nomura Research Institute Ltd. A strong
2029, reaching Rs 35 trillion mark.
network of 15,000 CNG and 1,500 LNG
stations by 2030 would have the potential to
transform the Indian mobility scenario, with an
expected 33 million natural gas vehicles as

compared to 3.3 million in 2019.

India was the biggest recipient of funds from
Asian Development Bank in 2018 and would
continue to get sovereign loans in excess of USD
3 billion in 2019 as well. The multilateral
funding institution committed USD 3 billion in
sovereign loans to India in 2018, the highest
level of assistance since sovereign operations
began in the country in 1986.
A study from the Capgemini Research Institute has
found that just 10% the major automotive
companies are implementing AI projects to scale,
with many falling short of an opportunity that
Global warming has caused the Indian economy
to be 31% smaller than it would otherwise have
been, according to a Stanford study which shows
how Earth's temperature changes have
increased inequalities.
,
Energy investment has risen most rapidly in
India in three years till 2018, up 12% to around
$85 billion, according to the International
Energy Agency (IEA) report. While global energy
investment stabilised at near $1.85 trillion in
2018 after three years of decline, the US and
India were the only two countries where
investment in energy recorded a growth in 2018
from 2015 levels.

could increase operating pro t by up to 16%

Unit(s): 1 Lakh = 100,000; 10 Lakhs = 1 Million; 100 Lakhs/10 Million = 1 Crore.

22
 Stat-O-Sphere

Stat-O-Sphere

Online food delivery and grocery players have

managed to get a fairly big slice of the funding
pie in 2018-19, rustling up close to $2 billion. A
big chunk of this would be used to create
delivery infrastructure and acquire customers.
India retained its position as the world's top
recipient of remittances with its diaspora
sending a whopping USD 79 billion back home
in 2018, according to the latest edition of the
World Bank's Migration and Development Brief.
India was followed by China (USD 67 billion),
Mexico (USD 36 billion), the Philippines (USD
34 billion), and Egypt (USD 29 billion). Over the
last three years, India has registered a signi cant
ow of remittances from USD 62.7 billion in
2016 to USD 65.3 billion 2017.
The Ipsos' What Worries the World Global Survey
observed that worries notwithstanding, India
bucks the global trend of pessimism where 22
countries out of the 28 nations covered feel
their country is on the wrong track. Indians are
most worried about terrorism, unemployment,
and nancial and political corruption, even as at
least 73% of the countrymen are optimistic that
the nation is headed in the right direction,
according to the survey.
Global trade growth is expected to be lower at
2.6% in 2019 than the 3% growth recorded in
2018, according to the World Trade
Organization. It attributed its dismal outlook to
widespread “tensions” and economic
uncertainty. This could have a major impact on
the outbound shipment from India.

Unit(s): 1 Lakh = 100,000; 10 Lakhs = 1 Million; 100 Lakhs/10 Million = 1 Crore.

23
 Source: Interna onal Engery Agency (IEA), ANRPC, OICA, J.D. Power India Research, ASEAN Automo ve Federa on,
Central Electricity Authority (CEA), Kantar IMRB, China Daily, commercialfleet.org ; primemovermag.com.au

About ATMA
Headquartered in New Delhi (India), Automo ve Tyre Manufacturers’ Associa on (ATMA) is amongst the most ac ve and well known
na onal industry bodies in the country. Being a representa ve body of eleven large tyre companies in India accoun ng for over 90% of tyre
produc on, ATMA has been accorded status as the true voice of the Indian tyre industry.
ATMA works towards promo ng and safeguarding the interests of the tyre industry in India primarily by ac ng as conduit between the
Government and the industry. The Associa on strives to be an ac ve par cipant in policy making process and holds frequent mee ngs with
the Government departments to discuss the challenges being faced by the industry in the ever-changing economic environment.
The Associa on acts as the industry’s interface with the media, opinion leaders, NGOs and other Industry associa ons around the world so
as to present the perspec ve of Indian tyre industry on different issues.
ATMA Research
ATMA Research is a specialized in-house resource of Automo ve Tyre Manufacturers’ Associa on that aims at compiling, and analyzing
informa on on automo ve tyres as well as upstream (Natural Rubber and other raw materials) and downstream (Automobile) sectors in
India. The informa on for analysis is sourced from authen c and reliable sources including tyre majors, Government departments,
regulatory bodies, other industry associa ons and apex industry chambers.

Disclaimer:
Automo ve Tyre Manufacturers’ Associa on (ATMA), has taken due care and cau on in preparing this Report based on the informa on/data obtained by ATMA
from sources which it considers authen c and reliable. However, ATMA does not guarantee the accuracy, adequacy or completeness of the Data / Report and is
not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommenda on to invest / disinvest in
any company or sector covered in the Report. No part of this Report may be published / reproduced in any form without ATMA’s prior wri en approval.

ATMA Research
Automo ve Tyre Manufacturers’ Associa on
May 2019

Automotive Tyre Manufacturers’ Association (ATMA)

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