Rise of the Auto Industry in India

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Rise of the Auto Industry in India

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Overview The Automotive Industry of India is one of the larger markets in the world and fast growing India's passenger car and commercial vehicle manufacturing industry is the 6th largest* in the world behind major manufacturers such as Japan, Germany, US and the likes Annual Production of 4.14 million units in 2012. An increase of 5.5% from 2011*  Key Pillar of Economy and major contributor to India’s GDP - 7% This dynamic industry currently employs about 19 million* people both directly and indirectly *Source: en.wikipedia.org/wiki/Automotive_industry www.oica.net/category/production-statistics/2012-statistics/ www.siamindia.com/Event/view-eventhead.aspx?id=286

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Background of the Auto Industry The automobile industry can be classified into: a) Passenger vehicles b) Commercial vehicles c) Three wheelers d) Two wheelers Source: http://www.siamindia.com/scripts/market-share.aspx

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Classification of Commercial Vehicle Market The goods carrier market presently dominates the CV sector, with an approx. share of 88% of the market volumes* *www.indiacommercialvehiclesummit.com

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How Does Auto Sector Work?

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Emergence of Auto Finance Sector Factors: De-licensing of the auto sector in 1991 Opening of 100% FDI Increase in purchasing power over the years and growth of the Indian middle class with high disposable incomes

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Future Growth…

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Overall Expected Growth (Next 5 Years) By the fiscal year 2017, penetration levels are expected to increase to: 74% for cars from 68% 66% for utility vehicles from 62% as a result of a moderation in interest rates and alleviation of credit risk Loan-to-value (LTVs) expected to increase marginally to 75% for cars and 71% for UVs from 74% and 70% respectively over the next 5 years Source: CRISIL Research, Retail Finance - Auto, December 2012

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Domestic Car & UV Industry – Expected Growth Source: *CRISIL Research, Car & UV Opinion - March 2013

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Growth Drivers for Private Vehicles Strong prospects in the long-term. Growth to be driven by increase in income of households and higher passenger vehicle penetration Addressable market is expected to grow at a CAGR of 16% to reach 139 Million households in 2017-18 from 67 Million in 2012-13 UV sales expected to grow at 15-17%. Moderation in growth due to expected diesel price hikes Small Cars segment is expected to grow marginally lower than sedan with sedan sales growing at 12-14% as a result of high petrol prices With only 11 cars per 1000 people, India’s potential is greater

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Global Comparison in terms of PV per 1000 people *Data is for CY2011

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Auto Industry Volumes *Source - Crisil

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Overall Demand Drivers Increase in affordability Growth in Addressable Market Entry of New Players and New Model Launches Increase in dealerships and access to Finance Reduction in holding period, which increases the demand for second vehicles Growth in Economic Activity Infrastructure development, structural changes and government initiatives

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Automobile Finance Growth Factors Entry of Private Sector banks & Financial Institutions due to Liberalization of Economy Higher Disposable Income due to Economic Growth, especially for young professionals in the IT sector Availability of credit data, empowering banks and financial institutes to offer high loan to value and affordable EMIs Widespread of Automobile Finance companies to remote locations as manufacturers setup shop across the nation Emergence of direct selling, collection and recovery agents which support banks and institutes during the lending cycle Securitization of automobile loans after the 2008 financial crisis

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