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Automobiles
IBEF

Despite the fiscal slowdown worldwide, India had maintained its growth rate at a steady 8-8.5 per cent and the automobile industry has also grown in excess of 13 per cent over the last few years. With easy financing options and with the wide range of cars being launched frequently, the Indian automobile enthusiasts have never seen it better. Recently, the President of the industry body Society of Indian Automobile Industry (SIAM), Pawan Goenka commented that the Indian Automobile Industry is expected to grow at the rate of 15 to 16 per cent in 2011. And this growth will be across the categories from two wheelers and four wheelers to commercial vehicles. According to a study by Booz & Company, a Global Management Consulting Company, the Indian Automobile industry will overtake the European market and is slated to become the worlds fourth largest by 2015 and will be selling almost 6 million units annually by 2020. In the Automotive Mission Plan 2006-2016 it is stated, By 2016, India would emerge as the worlds seventh largest car producer (as compared to the eleventh largest currently) and retain 4th largest position in world truck manufacturing sector. Further, by 2016, the automotive sector would double its contribution to the countrys GDP from current levels of 5 per cent to 10 per cent. Its contribution to the manufacturing sector would rise to 30-35 per cent from the current level of 17 per cent. This is because the share of manufacturing in GDP is expected to go up to around 35 per cent from current level of 17 per cent by 2016. The Union Budget of 2011-12 was termed as a Reform Oriented Budget by Dr Pawan Goenka, President, SIAM. Several reform initiatives including roadmap for Direct Taxes Code, Constitutional Amendment Bill for Goods & Services Tax (GST) which would be tabled in the current session of the Parliament and also pilot project across 11 states for implementation of IT towards GST introduction is positive for the automobile industry. Investments: Most car brands have either come up with India specific models and/or have launched international models to satisfy the consumers enthusiasm for newer vehicles. General Motors (GM) India plans to launch six new vehicles over the next two years in India at an investment to the tune of US$ 300 million. GM has invested over US$ 1 billion in India till date. To meet the rising demand from the local market, Toyota Kirloskar Motors Ltd (TKML), the local subsidiary of the Japanese company, will invest US$ 66.45 million to enhance its capacity by 60,000 units in the next one year. Mahindra & Mahindra Ltd (M&M) has begun work on its seventh tractor plant at Zaheerabad in Andhra Pradesh (AP). The plant with a proposed capacity of 100,000 units a year would entail an investment of US$ 66.97 million. UK-based luxury and sports car maker Aston Martin has marked its entry into India with the launch of its entire range, which includes the V8 Vantage Coupe, V8 Vantage Roadster, V12 Vantage, DB9 Coupe, DB9 Volante, V8 Vantage S, Virage and the four door sports car Rapide. British carmaker Bentley has launched a 4-seater coupe of its Continental GT luxury sedan with a price tag of US$ 4,31,290 (ex-showroom, Delhi). The company aims to cross the 100-units mark in the Indian market by 2012. Daimler, the parent company of Mercedes Benz, is planning to launch a compact car in India based on the Smart range. Frances Renault and Japans Nissan will provide technical assistance to alter and modify the basic design of Daimlers Smart two-seater car. BMW India is planning to increase its dealership network in 2011. Under its Phase-1 expansion plan, the automobile manufacturer has set up 12 outlets in the country. In Phase-2, it has planned to increase it to 22 outlets from the present 18. The company inaugurated its new outlet OSL Prestige in Bhubaneswar recently. Hyundai Motor India Ltd (HMIL) will soon be setting up a greenfield plant in India. The company will

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be spending US$ 89.1 million for this purpose. This plant will be utilised to build 1.5 lakh diesel engines. Honda SIEL India Ltd is planning to launch their small car in India in 2011. Renault recently launched its five-year plan which will focus on India and other emerging markets. The company will be launching the Koleos and Fluence in India in 2011 as well as an SUV in 2012. Toyota has unveiled the 2011 Etios, which was specially developed for India. The five- door variant of the Etios will be launched in April by the company in 2012. Toyota will construct a second plant at its Bidali complex in Karnataka in an investment worth US$ 713.8 million for the manufacture of the Etios, with its two varieties, the sedan and the hatchback. Mitsubishi is planning to introduce new models in India and tweak the existing ones. As part of the plan, the company will launch the new Lancer in India and Lancer Evo X and two SUVs Pajero Sport and the 2010 Outlander. Daimler India Commercial Vehicles plans an investment of US$ 981 million over a five year period in the manufacture of light, medium and heavy duty trucks at its plant in Oragadam. Hero Honda and Ashok Leyland-Nissan are also planning new factories.

Domestic Market/Sales: According to SIAM, the cumulative production data for April-January 2011 shows production growth of 27.45 per cent over same period in 2010. In March 2011 as compared to March 2010, production grew at 20.62 per cent. The industry produced 17,916,035 million vehicles of which share of two wheelers, passenger vehicles, three wheelers and commercial vehicles were 75 per cent, 17 per cent, 4 per cent and 4 per cent respectively. The growth rate recorded for Domestic Sales for 2010-11 was 26.17 per cent amounting to 15,513,156 vehicles. Passenger Vehicles segment grew at 29.16 per cent during April-March 2011 over same period last year. Passenger Cars grew by 29.73 per cent, Utility Vehicles grew by 18.87 per cent and MultiPurpose Vehicles grew by 42.10 per cent in this period. The overall Commercial Vehicles segment registered growth of 26.97 per cent during April-March 2011 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered growth of 31.78 per cent, Light Commercial Vehicles grew at 22.88 per cent. Three Wheelers sales recorded a growth rate of 19.44 per cent in April-March 2011. While Passenger Carriers grew by 22.03 per cent during April-March 2011, Goods Carriers registered growth of 9.45 per cent. Two Wheelers registered a growth of 25.82 per cent during April-March 2011. Mopeds, Motorcycles and Scooters grew by 23.53 per cent, 22.86 per cent and 41.79 per cent respectively. Maruti Suzuki posted a 14.7 per cent rise in January car sales while Mahindra & Mahindra reported a sales growth of 22 per cent in comparison to last year. Tata Motors posted a 15 per cent rise in January sales. Tata Motors has reported a consolidated net profit of US$ 540.3 million for the quarter ended December 2010, up 273 per cent as compared to US$ 144.89 in same quarter the previous year. Skoda Auto India has reported impressive sales growth for January 2011, with total sales for January 2011 at 2825 units, as against 1881 units in January 2010. Volkswagen too has registered impressive growth in 2011 with more than 5000 units of the Polo hatchback and its sedan version, the Vento, in January. Exports During April-March 2011, overall automobile exports registered a growth rate of 29.64 per cent. Passenger Vehicles registered marginal growth at 1.64 per cent in this period. Commercial Vehicles, Three Wheelers and Two Wheelers segments recorded growth of 69.51 per cent, 55.86 per cent and 35.04 per cent respectively during April-March 2011. Road Ahead: After robust sales last year, the Indian automobile industry seems set to sustain the growth trajectory in 2011 with a slew of new launches, while trying to keep prices competitive. According to a report by KPMG, Demographically and economically, Indias automotive industry is well-positioned for growth, servicing both domestic demand, and, increasingly export opportunities...Manufacturers are already planning for the future: early advocates of technological and distribution alliances have yielded generally positive results, enabling domestic OEMs to access global technology and experience, and permitting them to grow their ranges with fewer financial risks.

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