6th Auto Trade Dialogue

Transcription

1 Society of Indian Automobile Manufacturers 6th Auto Trade Dialogue February 4, 2014

2 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

3 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

4 Population 1.2 billion Urban Population c.30% GDP, US $ Billion (FY13E) 1,758 GDP Growth Rate, % (FY13) 4.5% Per Capita GDP, US $ Nominal 1,514 Age structure: 0-14 years :30% years : 65% 65 years and over : 5% Source: RBI, Census of India, other govt. agencies

5 Income class Source: CRISIL Research Income (USD PPP) Population Million % Country Income (USD PPP) Population (Million) Highest Singapore High Australia Upper Middle Lower Middle Thailand Indonesia Lowest Sub-Saharan Africa and which vehicles will these consumers buy? Large bottom of the pyramid Infrastructure: space constraints and congestion Fuel efficiency (both demand pull and regulation push) Source: Analysis Feature packed compact vehicle market

6 Heavy Regulation Partial Liberalization Liberalization Globalization Closed market License Regime Outdated models High duties and sales taxes Broadbanding Promotion of exports by govt JV between Suzuki and govt of India to form Maruti Udyog Automatic approval of FDI upto 51% equity Improved supplier base De-licensing Lowering import duty on components Implementation of VAT Automatic approval of FDI upto 100% equity Abolition of localisation, forex norms Entry of foreign OEMs and tier 1 component companies India global small Car hub Full scale maturity development Designed for India products 4.18 mn OEMs offshore R&D centres Indian OEMs and auto comp M&A Large scale Import of components and export of vehicles and parts 45K Production Volume 157K 752K % pa 17% pa 11% pa

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8 USA 2 Japan 3 Germany 4 France 5 South Korea 6 Spain 7 Canada 8 China 9 Mexico 10 UK 11 Italy 12 Brazil 13 Russia 14 Belgium 15 India 1 USA 2 Japan 3 Germany 4 China 5 France 6 South Korea 7 Spain 8 Canada 9 Brazil 10 UK 11 Mexico 12 India 13 Russia 14 Italy 15 Thailand 1 Japan 2 China 3 USA 4 Germany 5 South Korea 6 Brazil 7 France 8 Spain 9 India 10 Mexico 11 Canada 12 Russia 13 UK 14 Thailand 15 Turkey 1 China 2 USA 3 Japan 4 Germany 5 South Korea 6 India 7 Brazil 8 Mexico 9 Thailand 10 Canada 11 Russia 12 Spain 13 France 14 UK 15 Czech Rep. Source: OICA 8

9 Auto Policy 2002 Focus on small cars and utility vehicles Promotion of R&D Impetus to Alternative Fuel Vehicles Lower emissions using improved vehicle technology, improved fuel quality and Parc modernisation Automatic approval for 100% FDI; no minimum investment criteria $34 bn In FY07 $145 bn by FY16 & 10% of GDP Automotive Mission Plan Infrastructure Promote brand India Favorable business environment Attract investment Promote R&D Upgrade quality standards Upgrade manufacturing technology Cost competitiveness Develop R&D capability Target overseas markets 9 Will fall short of vision target due to implementation and slowdown

10 Contribution to economy Employment FDI (Apr-2000 to Apr- 2013) ~ 7% of GDP ~ 22% of Manufacturing GDP Total 1.1 mn 0.2mn OEMs 0.5mn Auto-Component Companies 0.4mn Service Network ~ USD 8 bn or Rs. 39 bn 4.3% of total FDI in India Industry Turnover ~USD 80bn Source:

11 Countries Cars/1000 pop CVs/1000 pop 2W/1000 pop Germany Japan Indonesia India Thailand China US Note: India data is based on 2012, but data for other countries from Wards vehicle population data Source:, Ward s Auto

12 Car Parc per 000 people GDP per capita and Number of cars owned per 000 people (2010) US Germany Japan Mexico Russia Korea Indonesia Thailand Brazil Taiwan India China Vietnam GDP Per Capita [USD/capita]

13 CAGR 7% ( ) Source: CSO, analysis

14 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

15 3,000,000 16,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 PVs (LHS) CVs (LHS) 3W (LHS) 2W (RHS) 14,000,000 12,000,000 FY04-14 Global CAGR, % 10,000,000 FY14E % Rank PVs 11% -5.8% 6 CVs 10% 8,000, % 5 3Ws 6% -9.3% 1 6,000,000 2Ws 10% 5.4% 2 4,000,000 2,000,000 - FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E Source:, OICA - Note: FY means 12 month ending March. FY14E based on Apr-Dec % Var

16 700, , ,000 PVs (LHS) CVs (LHS) 3W (LHS) 2W (RHS) FY04-14 CAGR, % FY14E % PVs 17% 8% CVs 15% -13% 3Ws 18% 16% 2Ws 23% 5% 2,500,000 2,000, ,000 1,500, ,000 1,000, , , ,000 - FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E Source: - Note: FY means 12 month ending March. FY14E based on Apr-Dec % Var

17 F10-Q2 F10-Q3 F10-Q4 F11-Q1 F11-Q2 F11-Q3 F11-Q4 F12-Q1 F12-Q2 F12-Q3 F12-Q4 F13-Q1 F13-Q2 F13-Q3 F13-Q4 F14-Q1 F14-Q2 % GDP growth Showing some improvement now 10% 9.4% 9% 8% 7% 7.3% 6% 5% 4% 5.3% 4.7% 4.4% 4.8% Source: CSO

18 PVs CVs 1. Lower income growth 1. Declining GDP growth 2. High fuel cost 2. Mining restrictions 3. High tax on larger PVs 3. Slowdown in Industrial activity 4. High Inflation & interest rates 4. Rising diesel prices 5. Negative sentiment 5. High interest rates

19 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

20 % 45 Small Cars MUVs Large Cars Trucks Buses Dec- 08 Feb- 09 Apr-09 Feb- 10 Feb- 11 Feb- 12 Feb- 13 Note: 1. Additional 3% Excise Duty on passenger vehicles with GC >170 mm, length >4000 mm, engine capacity >1500 cc. 2. From , NCCD of 1% was imposed. This is included in the graph in addition to the Excise Duty. 3. Additional Higher & Secondary Education Cess of 1% levied from Small Cars defined as cars upto 4 metres in length and 1200 cc for petrol/ 1500 cc for diesel

21 Vehicle Category Current Excise Duty Passenger Vehicles 12-30% L<4m, 1.2L P, 1.5L D (Small cars ) 12% L >4m but <1.5 L 24% L>4m but > 1.5L 27% MUVs/SUVs/Double Cab 30% Hybrid cars 12% Two wheelers 12% Electric cars, 2W & 3W 6% Commercial Vehicles 12% Three wheelers 12% 21

22 Tax Category Rate R & D Cess 0.125% Education Cess 3% (of excise) National Calamity Contingent Duty 1% Central Sales Tax (CST) for out of state sale State Value Added Tax (VAT) 12.5% 2% Octroi (in one state only) 4% State Road/Registeration Tax 4-21%

23 International Category Indian Type Customer price, $ Est OEM price, $ Customer/ OEM price, % Tax elements/ OEM price, % A Small car 7,143 4,655 53% 47% B C Middle, MUV Large Car/SUV 15,873 8,965 77% 71% 23,810 13,448 77% 75%

24 Basic Customs Duty Vehicles CBU CKD Passenger vehicles 100%*/60 10%/30% Two wheelers 75%**/60% 10%/30% Three wheelers 60% 10%/30% Commercial vehicles 10% - Components*** 7.5%-10% * With CIF value >US $ 40,000 or engine capacity >3000 cc for petrol and >2500 cc for diesel vehicles, or both. ** For motor cycles with engine capacity of 800 cc or more *** Some components progress down to nil on FTAs

25 Education Cess Tax Category Rate 3% of tax National Calamity Contingent Duty 1% Countervailing Duty (CVD) Equivalent to excise duty Special CVD 4%

26 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

27 WTO compliant policies No restrictions on import- no Quantitative Restrictions No localisation requirements No R&D requirement 100% FDI allowed <=10% tariffs except for PV, 2W/3W CBUs No differentiation in domestic taxation for imports Conditions of import Emission & Safety norms as applicable to domestic companies Joined UN-ECE WP 29 for global standard in technology and signed the 1998 Agreement Increased engagements in Free Trade Agreements with sensitivities on CBUs

28 CONCLUDED Japan Korea ASEAN Malaysia Singapore Sri Lanka Bangladesh Bhutan SAFTA Serbia/Montenegro Mercosur Chile BEING NEGOTIATED Australia New Zealand EFTA Russia Israel Canada Peru EU RCEP (16 Asian countries) Thailand Indonesia Pakistan Nepal BIMSTEC SACU

29 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

30 Norms in 13 major Metros/ Cities BS-IV + OBD-I OBD-II Apr-10 Apr-13 Tightened Idle emission norms for in-use vehicles Feb-13 Rest of India Apr-10 BS-III Norms Different Fuel Quality in different parts of the Country Same vehicles plying in various areas Affects after treatment devices/ OBD/ other engine components

31 Auto Fuel Vision & Policy 2025 Working Group-1 Air Quality & Vehicular Emissions Working Group-2 Ambient Air, public health, Fuel economy Working Group-3 Refinery Upgradation, fiscal measures Working Group-4 Auto Fuel mix,logistics

32 Indian Automobile Industry Current market conditions Taxation Trade Agreements Environment Policies Safety

33 Active Safety Passive Safety Vehicle Type Approval Emissions Lightings Other Safety Requirements

34 No of road accidents/100,000 people No of accidents/10,000 vehicles Source: MoRTH

35 2012: >138,000 fatalities Key Causes Multimodal use of roads Road quality Driving Discipline Jay Walking Drunk driving Speeding Category of user Nos % 2W riders % MHCV Occupants % PV, LCV Occupants % Other motorised occupants % 3W Occupants % Other non motorised riders % Pedestrians % Total % Improvement in vehicle safety norms itself not enough Source: MoRTH

36 Auto industry key component of Indian economy- both co-dependant Notwithstanding current weakness, arguably the most promising market globally Potential dependant on Implementation of auto policy Move to GST & rationalisation of taxation Investment in infrastructure Improvement in road safety measures & I&M regimes

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