Summary
The commercial vehicle (CV) industry faced challenging times in 2008-09-reduction in cargo and passenger traffic, lower freight rates, difficulty in availability of vehicle finance, stricter appraisal norms for financing-all on the back of the global financial crisis.
The domestic CV sales dropped by 21.7 per cent over the previous year. The Goods Carrier (GC) segment witnessed a decline of 24 per cent, while Passenger Carrier (PC) segment witnessed sales drop by 7.1 per cent over the same period previous year. The exports too declined by 27.7 per cent in 2008-09.
The profitability of the manufacturers came under pressure in 2008-09-in the first half due to high input prices and in the second half due to huge reduction in sales volumes. The operating profit margin declined to 5.7 per cent from 9.2 per cent in 2007-08.
The stimulus packages announced by the government like a) excise duty cut from 14 per cent before December 2008 to 8 per cent (now rolled back to 10 per cent) b) implementation of the fleet modernisation program of the State Road Transport Undertakings [SRTU] under the Jawaharlal Nehru Nation Urban Renewal Mission (JNNURM) and c) accelerated depreciation at the rate of 50 per cent of the annual allowance for vehicles purchased between September 30, 2008 and September 30, 2009 ensured a revival in the sector in 2009-10.
Although the exports for the industry still have not come out of the woods, the domestic sales managed to revive, with recovery being more pronounced post September 2009 with growth rate for CV sales for the period September-December 2009 standing at 92.6 per cent y-o-y as compared to 19.1 per cent for April-December 2009. The sector was also helped by reduction in commodity prices during the first half of FY10. The prices of both steel and rubber reduced by around 20 per cent, translating into improved margins of the CV industry.
Various launches were made during April-December 2009 owing to the revival in the CV demand. In Light Commercial Vehilce (LCV) GC segment, Tata Motors launched 'Super Ace' and 'Ace EX' under <=3.5 tonnes sub-segment. In Medium and Heavy Commercial Vehicles (MHCV) GC segment it launched a new range of premium 'World Truck' in the 10 to 75 tonnes. Ashok Leyland launched its 31 tonner Multi Axle Vehicle '3116'. Mahindra and Mahindra launched the 0.5-tonne 'Gio' in competition to Tata Motors sub-one tonne 'Ace'. The company also launched Maxi truck CNG and a mini truck 'Maximmo' during the said period. Thus, the competition level is rising in the CV industry.
We have developed a detailed statistical model that attempts to forecast the domestic commercial vehicle sales separately for goods and passenger use on the basis of interaction with the industry and analytical acumen. The GC segment sales are forecasted on the basis of GDP growth and thereby the growth in cargo, the existing fleet capacity and its utilisation rate, while the PC segment sales are forecasted on the basis of growth in population, the per capita travel depending on the income levels and the split of travel between public and private modes of transport. Other qualitative factors like macro-economic outlook, government actions, consumer confidence, willingness of vehicle financers to finance purchases, actions of OEMs like launches, aggressiveness, sales push techniques, dealer network, etc. have also been quantitatively built in demand forecasting model.
We foresee healthy growth of commercial vehicles in the next 4-5 years as the economy has resumed its buoyancy. LCV sales are likely to outpace the MHCV sales in terms of units and overall GC segment growing at a faster rate as against the PC.
Abundant and low cost labour coupled with local availability of raw materials like steel, aluminium and natural rubber, coupled with healthy demand outlook and 100 per cent FDI has made India an attractive destination for foreign players that are eyeing for a share in the pie either through joint venture with an Indian partner or on a stand-alone basis.
Table of Contents
EXECUTIVE SUMMARY
I. OUTLOOK SECTION
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Outlook on Domestic Market and Exports
Demand Forecasting Model
Outlook on Profitability
II. INDUSTRY SECTION
1. INDUSTRY CHARACTERISTICS
Classification of automobile industry
Classification of CV industry
Herfindal-Hirschman Index
Major Clusters
Porter's seven force analysis
Government Regulations-Emission norms, Customs Duty, Excise Duty VAT / Sales Tax, FDI, Research & Development
Technical parameters-Engine Power, Loading platform, turning circle diameter
2. DOMESTIC MARKET
Trend in Goods Carrier Sales
Trend in Passenger Carrier Sales
Player-wise performance-Tata Motors, Ashok Leyland, Mahindra and Mahindra, Eicher Motors, Force Motors, Swaraj Mazda
3. IMPORTS
Segments
Key origin countries
4. EXPORTS
Key Markets
Trend in Goods Carrier Sales
Trend in Passenger Carrier Sales
Player-wise performance
5. COST STRUCTURE
Raw materials costs-Steel, Plastic, Rubber
Research and Development costs
Selling and Marketing costs
Employee costs
Depreciation costs
6. PROFITABILITY AND CREDIT
PROFILE
Operating margins
Net profit margins
Return on Capital Employed (RoCE)
Debt equity
Interest Coverage
Net Cash Accruals to Debt
7. GLOBAL SCENARIO
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Introduction
Global Trade
Key Players profile
III COMPANY SECTION
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Tata Motors
Ashok Leyland
Mahindra and Mahindra
Eicher Motors
Force Motors
Swaraj Mazda
IV ANNEXURES
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Sales Volumes by segment and sub-segments for last five years: Domestic and Exports
Player-wise Domestic Sales Volumes by segment and sub-segments for last five years
Player-wise Export Volumes by segment and sub-segments for last five years
Global Manufacturer-wise Production Volume for last five years
LIST OF PICTURES AND GRAPHS
OUTLOOK ON DOMESTIC MARKET
Trend in cargo movement [BTKM]
Trend in passenger movement [BPKM]
Share of Road Rail in Cargo Traffic [BTKM
Share of Road Rail in Passenger Traffic [BPKM]
Vehicular freight movement
Goods carrier tonnage based domestic sales mix [based on rated payload]
Domestic Three-wheeler GC and <3.5 tonnes LCV GC sales comparison [Volume]
Three-wheeler GC and <3.5 tonnes LCV GC sales mix [Apr-Dec 09]
Share of Domestic sales of MAV to HCV [In tonnage]
Key Models in the >16.2 tonnes MAV segment [current and expected]
Domestic Three-wheeler PC and LCV PC sales comparison [Volume]
INDUSTRY CHARACTERISTICS
Automobile industry classification
Commercial vehicle sub-segments
Category-wise vehicle usage
Analysis of HHI in CV industry
Total CV Sales Break-up [Volume]
Total CV Sales-Player-wise market share [Volume]
CV manufacturing locations
Porter's seven force analysis
DOMESTIC MARKET
Domestic CV Industry Sales [Volume]
Domestic GC Sales [Volume]
Domestic GC Break-up [Volume]
Domestic sales volumes as share of total sales Tata Motors, Ashok Leyland, Mahindra and Mahindra, Eicher Motors, Force Motors, Swaraj Mazda
IMPORTS
CV Imports Trend (GC and PV)
CV Imports-Country of origin (by value): 2008-09 and 2003-04
EXPORTS
Trend in India's exports-CV, GC, PC
Export volumes as share of total sales-Tata Motors, Ashok Leyland, Mahindra and Mahindra, Eicher Motors, Force Motors, Swaraj Mazda
COST STRUCTURE
Domestic Steel Prices
Steel Prices in China
Natural Rubber Price Trend
GLOBAL SCENARIO
Major Producers, exporters and importers
Regional production mix of the top CV manufacturers (2008)
PLAYER PROFILES
Tata Motors-Domestic Sales Segmental Breakup (2009)
Ashok Leyland-Domestic Sales Segmental Breakup (2009)
Mahindra and Mahindra-Domestic Sales Segmental Breakup (2009)
Eicher Motors-Domestic Sales Segmental Breakup (2009)
Force Motors-Domestic Sales Segmental Breakup (2009)
Swaraj Mazda-Domestic Sales Segmental Breakup (2009)
LIST OF TABLES
EXECUTIVE SUMMARY
Total CV-Forecast
Domestic CV-Forecasts
CV Exports-Forecast
Outlook on profitability
OUTLOOK ON DOMESTIC MARKET
Total CV-Forecast
Domestic CV sales forecasts
Key Models in the >3.5 tonnes GC segment [current and expected]
Fuel cost of an HCV v/s MAV
Key Models in the >16.2 tonnes MAV segment [current and expected]
State-wise orders for the buses under JNNURM [status till December 2009]
Recent and ongoing capacity expansions in CV Industry
OUTLOOK ON EXPORTS
CV Exports-Forecast
CV Exports-Key players [April–December] [Volume]
OUTLOOK ON PROFITABILITY
Aggregate-Half-yearly financials
Outlook on profitability
INDUSTRY CHARACTERISTICS
Emission norms
Basic excise duty and customs duty
NATRIP Centres
DOMESTIC MARKET
Domestic Market performance [Volume]-Tata Motors, Ashok Leyland, Mahindra and Mahindra, Eicher Motors, Force Motors, Swaraj Mazda
EXPORTS
CV, GC and PC exports from India in FY 2009
GC and PC Exports Break-up
GC Exports-Destination-wise market share FY 2009
PC Exports-Destination-wise market share FY 2009
Snapshot of player performance in export market-Tata Motors, Ashok Leyland, Mahindra and Mahindra, Eicher Motors, Force Motors, Swaraj Mazda
COST STRUCTURE
Raw material cost share
Research and development costs share
Selling and Distribution costs share
Employee costs share
Depreciation cost share
Aggregate cost structure
PROFITABILITY AND CREDIT PROFILE
5 year trend in OPM, NPM, RoCE, Debt Equity, Interest coverage, Net cash accruals to debt
GLOBAL SCENARIO
Global top CV, LCv, HCV and Buses manufacturers
General Motors Company
CV-Region wise production and Indian operations
Ford Motors Company
CV-Region wise production and Indian operations
Toyota Motor Corporation
CV-Region wise production and Indian operations
Chrysler Group LLC
CV-Region wise production and Indian operations
Daimler AG
CV-Region wise production and Indian operations
Fiat SPA
CV-Region wise production and Indian operations
Nissan Motor Company
CV-Region wise production and Indian operations
ISUZU Motors
CV-Region wise production and Indian operations
PSA-Peugeot Citroen SA
CV-Region wise production and Indian operations
Renault SA
CV-Region wise production and Indian operations
PLAYER PROFILE-TATA MOTORS
Tata Motors-Snapshot of key data and product portfolio
PLAYER PROFILE-ASHOK LEYLAND
Ashok Leyland-Snapshot of key data and product portfolio
PLAYER PROFILE-MAHINDRA AND MAHINDRA
M&M-Snapshot of key data and product portfolio
PLAYER PROFILE-EICHER MOTORS
Eicher Motors-Snapshot of key data and product portfolio
PLAYER PROFILE-FORCE MOTORS
Force Motors-Snapshot of key data and product portfolio
PLAYER PROFILE-SWARAJ MAZDA
Swaraj Mazda-Snapshot of key data and product portfolio
LIST OF BOXES
DOMESTIC OUTLOOK
Trend in total cargo and passenger movement
Share of Road vs Rail in cargo and passenger movement
'Hub-and-spoke' model
Shift in sales from 3-wheelers to <= 3.5 tonne LCV GC
JNNURM
INTRODUCTION
Evolution of the industry
