9 th October 2017 New Delhi. State of the Indian Automobile Industry Quarterly Review : Q2 FY18. SIAM Society of Indian Automobile Manufacturers

Transcription

1 9 th October 2017 New Delhi State of the Indian Automobile Industry Quarterly Review : Q2 FY18 SIAM Society of Indian Automobile Manufacturers

2 Q2 F18 Performance & Growth Domestic Market Performance Exports Performance Business Environment F18 Outlook 2

3 Q2 F18 Performance & Growth 3

4 1,476 1,679 1,649 1,891 1,872 2,041 4,997 5, Passenger Vehicle Sales 000s F16 F17 F18 PVs -Trends PVs= Cars + UVs + Vans 13% in Q2 F18 over Q2 F17 15% 14% 11% 13% 18% in Q2 F17 over Q2 F16 July Aug Sep Q2 2Ws -Trends Two Wheeler Sales 000s 2W= Scooters+ Motorcycles + Mopeds F16 F17 F18 12% in Q2 F18 over Q2 F17 21% in Q2 F17 over Q2 F16 14% 15% 9% 12% July Aug Sep Q2 Source: SIAM Data 4

5 Three Wheeler Sales 000s F16 F17 F18-11% 3% 19% 4% 3Ws-Trends 4% in Q2 F18 over Q2 F17 6% in Q2 F17 over Q2 F16 July Aug Sep Q2 CVs -Trends Commercial Vehicle Sales 000s CVs = M&HCV+LCV F16 F17 F18 21% in Q2 F18 over Q2 F17 0% in Q2 F17 over Q2 F16 14% 23% 25% 21% July Aug Sep Q2 Source: SIAM Data 5

6 MHCVs Sales 000s 80 F16 F17 F18 67 M&HCVs- Trends 7% 28% % % 20% in Q2 F18 over Q2 F17-14% in Q2 F17 over Q2 F16 July Aug Sep Q2 LCVs-Trends LCVs Sales 000s F16 F17 F % in Q2 F18 over Q2 F17 11% in Q2 F17 over Q2 F16 19% 20% 25% 21% July Aug Sep Q2 Source: SIAM Data

7 Q2 Exports 000s Q1 F16 Q1 F17 Q1 F % -24% 15% 16% PVs CVs 3Ws 2Ws Exports as a % of Production in Q2 F18 18% 11% 39% 11%

8 Business Environment 8

9 Months Natl. Banks Pvt. Banks NBFCs Months Natl. Banks Pvt. Banks NBFCs Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Source: Secondary Research 9

10 Commodity Unit 6 Months Variation Recent Variation March-17 Aug-17 % Variation June- 17 Aug-17 % Variation HR Steel Rs/ton 41,500 38, ,500 38, CR Steel Rs/ton 46,250 42, ,250 42, Pig Iron Rs/ton 31,680 30, ,750 30, Virgin Aluminium USD/ton 1,910 2, ,891 2, Copper USD/ton 5,839 6, ,724 6, Lead USD/ton 2,284 2, ,150 2, Polypropylene Rs/kg Natural Rubber Rs/kg Carbon Black Rs/kg Source: SIAM Data 10

11 Country Category Jan-Aug 2016 Jan-Aug 2017 % Change China Germany Brazil France S Korea Japan UK US India PV 14,482,400 14,807, % CV 2,311,700 2,703, % PV 2,257,800 2,323, % CV 236, , % PV 1,302,311 1,351, % CV 44,041 37, % PV 1,235,419 1,282, % CV 276, , % PV 1,186,902 1,166, % CV 183, , % PV 2,480,817 2,703, % CV 482, , % PV 1,680,799 1,640, % CV 494, , % PV 4,702,583 4,131, % CV 6,914,123 7,154, % PV 1,938,692 2,124, % CV 475, , %

12 1 Skoda Octavia- FACELIFT 10 Maruti Baleno Alpha CVT 2 Volvo V90 Cross Country 11 Volkswagen Tiguan 3 Mercedes Benz GLA Facelift 12 Mercedes-Benz E 220d 4 Jeep Grande Cherokee 13 Mercedes-AMG GLS 63 5 Mercedes AMG GLC 43 Coupe 14 Mercedes-AMG G 63 Edition Jeep Compass 15 Skoda Rapid Monte Carlo 7 Hyundai Verna 16 Mercedes-AMG GT Roadster, GT R 8 Datsun Redigo BMW 3-Series 9 Land Rover Discovery 18 Ferrari GTC4Lusso & GTC4Lusso T This list is illustrative and not comprehensive 12

13 Issues Affecting Auto Industry Economic growth Q1FY18 growth down to 5.7%. Inflation CPI inflation is now expected at 4% for fiscal 2018, vis a vis 4.5% for 2017 as food inflation remains in control Growth in Industrial Activity IIP growth dropped to 1.2% in July 2017, against 4.5% in July 2016 on account of poor performance by manufacturing, especially capital goods. Abrupt policy changes continue to affect long term sustainable growth of auto industry 13

14 F18 Outlook 14

15 Positives Increase in demand due to festive season, implementation of 7 th pay commission in a few states. Vehicle finance rates stable. Core sector growth rebounds to 4.9% in August, highest in FY18. This should bring back growth momentum in manufacturing sector and hence IIP. Key Concerns Slowdown in GDP growth. Frequent changes in policies. Increase in commodity prices. 15

16 Increase in compensation cess for many categories of vehicles. Motor vehicles for the transport of persons (including driver) falling under 87.02, which is for mass public transport, attract GST Compensation 15%. Bigger ambulances also, having seating, falling under is the only ambulance segment continue to attract higher compensation cess. It was not so in excise duty regime. Inverted duty structure for electric vehicles. Electric vehicles attract 12%, while for most of the components & input services GST is at 18 to 28%. Used vehicles continue to attract GST rate equivalent to new vehicle rate, thereby substantially increasing tax on trade of used vehicles through organized business. Challenges with GST Network. Road Tax not subsumed under GST. 16

17 Overall economy expectation India s GDP is estimated to grow at 7.0% in fiscal 18, which is similar as the demonetization impacted last year (7.1% GDP growth in fiscal 17) GST transition has impacted the first quarter GDP growth (5.7%) significantly. Further slow recovery in IIP, post GST implementation, indicates GST transitional issues are still hindering full recovery However near Normal monsoon, lower borrowing costs, softer inflation will continue to support consumption growth in fy18: CPI inflation is expected at 4% in FY18 vs 4.5% for FY17 as food inflation remains in control. We expect the Agricultural GVA to grow to 3.0% in FY18 as monsoon was not geographically well spread, and was just below sufficient rainfall at All India level (94% long period average). As a result, Kharif crop output value is expected to grow by 6-8% in FY18. However low reservoir levels would continue to put pressure on upcoming rabi crop. For FY18, industrial GDP is expected to grow at 6.3%, up from 5.6% in FY17 due to increased Government spending focused to boost the core sectors like steel etc. Overall, Services sector is expected to grow by 8.5% in fiscal 18 compared to 7.7% in the previous year with pressure on employee addition. A large part of the Automobile growth in FY18 would be on account of low base of last year (Second half of FY17 impacted by demonetization) 17

18 In FY 18 - The Passenger vehicle industry is expected to continue to grow positively While last year Central Pay commission payouts helped industry growth, this year states pay commission announcement (around 8 states have implemented pay revisions) is helping demand to continue. The positive effects of the same is expected to last by the end of the year Additional production capacities becoming operational to further help reduce waiting periods and hence back demand growth However, expected increase in cost of ownership by 3-5% in , as a result of increasing fuel costs & insurance expenses to put pressure on demand Oil prices are also expected to remain higher ($50-55$/ barrel in 2017 from $42/barrel in 2016) which would contribute to the increasing cost of ownership As compared to previous year, UV segment is expected have strong growth due to major model launches with aggressive prices and a higher base

19 LCV goods segment In FY 18- LCV demand expected to continue to grow Growth momentum to continue in due to better demand from consumption-driven sectors (PFCE to rise 8.9% in versus 8.7% in ). We expect freight demand to also see improvement due to a good monsoon and better crop output. Further demand is supported by aggressive push by financiers with higher Loan to values (LTVs) on LCV financing. Implementation of BSIV norms in multiple states even before April 2017 resulted in comparatively lower increase in cost of ownership in the LCV segment. As a result of lower pre-buying in Q4 FY17 (compared to its MHCV counterparts), the segment is expected to grow in FY18.

20 MHCV goods segment In FY 18 MHCV sales expected to drop in fiscal 18 MHCV sales are expected to drop further mainly due to:- Recent shift from BS-III to BS-IV, Led to pre-buy in Q1FY18 due to expectations of price rise. Higher cost of ownership (by 8-10%) due to increased prices, is expected to result in transporters delaying their purchases thereby elongating replacement cycles. Moreover, about 9% lower number of vehicles coming up for replacement in FY18 (sold in FY12 and FY13) due to weaker cumulative sales in the stated years. Freight demand failed to pick up in the first half of FY18 and pickup would be weak even in H2FY18. As a result fleet utilization is expected to be stable in FY18 at levels similar to FY17. This would impact the larger MAV segment. However, in Tippers and Tractor trailer the demand is expected to be better: In Tractor trailers, increase in container traffic at major ports and demand for cement movement and auto carrier applications is expected to positively impact trailer sales. For Tippers, while demand from end use segments like roads, construction and iron ore mining is likely to support sales; weakness in coal production to limit growth.

21 Buses segment -In FY18, overall bus segment is expected to continue to grow LCV buses: Tourist segment and private stage carriage segment hit by higher cost of ownership; private stage carriage segment additionally showed weakness due to constraints in body building Demand in school segment weak as it was hit by supply issues Weak demand from IT industry to hurt replacement demand and new demand for staff buses MHCV buses With new model launches school segment to drive demand in the ICV segment in FY18 as compared to the 5-7.5T segment 9T AC buses with pushback seats gaining prominence in the Staff segment; ICV staff segment to outperform the LCV staff segment Demand from STUs to be weaker than FY17 hampering growth in the segment Intercity segment facing constraint due to high cost of ownership; growth trajectory to decline

22 Motorcycle segment Improved economic indicators, 7 th pay commission pay outs, better rural incomes with good monsoons coupled with new launches to support this growth Crop output is expected to improve sentiments and boost contribution from the rural side which is bouncing back from demonetization. While the Apr-Aug 2017 growth for the segment is at 8%, growth is expected to accelerate on demonetisation affected low base of last year Scooters segment Scooters are expected to grow at a sharp pace led by the increased disposable incomes amidst positive economic factors, better rural incomes coupled with increasing contribution from the rural side and a increase in women participation. Increase in the proportion of females in urban regions joining the workforce has kept the urban workforce growth rate higher which is a big contributor to scooter sales Moreover, steady stream of launches/ upgrades as well as rising marketing push to also provide an additional kicker to the sales

23 Three-wheeler segment In FY18-Three-wheeler sales is expected to grow Rising urbanization and migration to cities to will continue to boost intracity transportation. Estimated increase in rural income, amidst better monsoon and good crop output to support three wheeler sales growth Three wheeler manufacturers are pushing further into rural areas as SCV s try to encroach on traditional three wheeler market Implementation of the Seventh pay commission recommendation raising discretionary spending and an expected rise in PFCE to continue to support growth in the segment

24 SIAM Society of Indian Automobile Manufacturers 24