Watch. Tone of the largest in the world. PASSENGER VEHICLES INDUSTRY. Sector 2015: US$1,582

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1 Watch Sector PASSENGER VEHICLES INDUSTRY he Indian automotive industry is Tone of the largest in the world. It accounts for 45% of the country's manufacturing gross domestic product and 7.1 % of the country's GDP. The automobile industry employs about 19 million people directly and indirectly. India is the fourth largest manufacturer of passenger cars. Since Apr 00 to Sep 16, the automobile industry has received FDI equity inflows of US$ 15.7 bn, accounting for 5% of the total FDI inflows in this period. The Indian passenger vehicle market is poised for strong growth. The current low level of vehicle penetration, rising incomes and aspirations of the Indian consumer, wide availability of vehicle models at different price points, inadequate public transport, greater focus of OEMs on the under-penetrated rural and semi-urban markets and easy availability of finance at competitive rates will be the key forces driving growth of the passenger vehicle industry in the coming years. Dun & Bradstreet expects the passenger vehicles sales to grow by an average annual growth rate of 9% during FY DEMANDDRIVERS Pickup in economic activity especially in services sector Increase in per capita income 2001: US$461 Demographics advantage Total population between the age yrs % % Service sector grew at a CAGR of 8.8% during FY12 to FY : US$1,582 Rising working age population will lead to higher income and hence higher demand for passenger vehicles

2 ` ` Growing spending power and changing consumption pattern th India has the world's 12 largest number of high-networth individuals Easy availability of finance, due to multiple financiers Private banks, PSU banks, NBFCs, Captive finance companies Rising discretionary spending (% shared in total consumption) FY91 41% FY15 62% PSU NBFCs Captive Finance Companies ``` Replacement of old vehicles New Regulation norms (BS VI emission norms to be implemented by 2020) Investment in roads & highways 6,029 km of projects completed during FY16 as compared to 4,410 km of projects in FY15. Major highway programmes currently underway are : 1. NHDP 54,748 km of National Highways 2. SARDP-NE 10,141 km 3. LWE - 5,477 km FUTUREDEMANDDRIVERS Subdued interest rates Cost of borrowing (PLR) FY % FY16 9.6% New product launches Strong growth in utility vehicle segment Modest fuel prices Dealer network expansion $ 108/barrel $44/barrel (Jan-Oct) *average Revival in rural and semi-urban demand

3 S U P P L Y S I D E D R I V E R S Global wage comparison (Cost of labour, US$ per hour) Competitive advantages facilitating emergence of outsourcing hub Mini Cars(%) Shift in production mix (Share in car production) Mid-size Cars (%) Compact Cars(%) Super Compact Cars (%) Car productionindia outperforms in Regions Europe Russia USA Brazil China India Japan 2015* (mn) Germany 46.4 Canada 38.3 US 35.4 Japan 35.4 Singapore 21.9 South Korea 17.7 Brazil 12 Taiwan 9.2 China 2.8 India 0.9 Y-O-Y(%) *calendar year Lower commodity prices Aluminium FY13 $1,976/tonne FY16 $1,591/tonne Outstanding Investments in PV FY 02 ` 91 bn FY 16 ` 300 bn *as of March Focus on R&D New product development (874 MNCs have set up 1,031 centers and around 45% of the topmost 500 global R&D spenders have their presence in India) Steel FY13 `48,630/tonne FY16 `34,819/tonne Presence across segments Manufacturers with presence across various segments can ensure higher volumes and better capacity utilisation by using common manufacturing facilities. Rubber Zinc FY13 $1,951/tonne FY16 $1,831/tonne FY13 $323/quintal FY16 $147/quintal Increasing emphasis on electronics & software

4 POLICYSUPPORT 100% FDI allowed via automatic route Target of `25 tn for investment in road infrastructure Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment Establishing special auto parks and virtual SEZs for auto components New Policies like Automotive Mission Plan Faster Adoption & Manufacturing of Electric Hybrid Vehicles (FAME) till 2020 KEYFOCUSAREASOFOEMS Fuel Efficiency & Emission control Fuel efficiency and emission control Usage of alternate materials for reducing vehicle weight Developing smaller engines Widening reach/geographical diversification Domestic: Expand sales and dealer network Exports: Explore new geographical markets OEMs looking to leverage India as a manufacturing hub Enhance global presence through foreign acquisitions and partnerships Enhance customer experience Telematics / IVI / Embedded software Social media platforms New products with advanced features (design, safety, connectivity) Cost optimisation Increasing localisation Foreign OEMs opting for local manufacture instead of imports Multi-plant operations (OEMs) ` $ Focus on technology Improve fuel efficiency Reduce emissions Improve safety & durability Connected vehicle

5 OPPORTUNITIES CONCERNS Investment decision on hold due to policy uncertainties surrounding the use of diesel engines due to emission norms Increasing middle-class population Discounts-led sales push resulting from Implementation of Seventh Pay Commission restricted pricing power in the wake of intense competition Green Revolution Electric, CNG vehicles & Hybrid Vehicles Insufficient CNG refueling stations GST implementation Reduce Supply Chain Cost Skill gap of 3.9 mn people projected in the auto & the auto components industry by 2022 Untapped rural markets & lower personal vehicle density Price sensitivity of the Indian consumer About Dun & Bradstreet Dun & Bradstreet (NYSE: DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since Nearly ninety percent of the Fortune 500 and companies of every size around the world, rely on our data, insights and analytics. Customers use D&B Risk Management Solutions to mitigate risk, increase cash flow and drive increased profitability; D&B Sales & Marketing Solutions to manage their master data, analyse markets, locate prospects and increase revenue from new and existing customers; D&B Economic Analysis Group for solution-oriented analyses of strategic economic and business developments, thereby aiding informed decision making and D&B Learning Solutions to facilitate professional growth and excellence among their executives. In 2016, D&B featured on the World s Most Ethical Companies list in the Business Services category by Ethisphere, for the eighth consecutive year. The World s Most Ethical Companies designation recognizes companies that truly go beyond making statements about doing business ethically and translate those words into action. For more information please log on to Dun & Bradstreet Information Services India Pvt. Ltd. ICC Chambers, Saki Vihar Road, Powai, Mumbai CIN: U74140MH1997PTC Tel: Fax: /82 DNB_India-economy@DNB.com