Research Category

Report on Indian Commercial Vehicle Industry 2009-1-6 11:43

Publisher:

Published:

Dec. 2008

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PDF

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US$1000.00 Single User PDF

Key Words:

Indian Commercial Vehicle

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Report Summary

After recording a strong performance in FY07, the Indian Commercial Vehicle (CV) industry fell into hard times in FY08. The domestic sales of the industry grew by 4.07% in FY08 as compared to a growth of 33.26% in FY07. The Medium & Heavy Commercial Vehicles Goods Carrier (M&HCV GC) segment particularly bore the brunt of the situation, with the domestic sales in this segment declining by 5.88% in FY08. The Light Commercial Vehicles Goods Carrier (LCV GC) segment, due to diversity of its usage, managed to clock a decent growth of 11.65%. The Passenger Carriers (PC) segment registered a strong growth of 26.51% on the back of ordering by both, private players and State Transport Undertakings (STUs).

The first half of FY09 brought more bad news for the industry as, in addition to M&HCV GC segment, the PC segment and the Export sales too remained subdued. Even the torch-bearing LCV GC sub-segment of Gross Vehicle Weight (GVW) <=3.5 tonnes witnessed a slowing growth rate in H1 FY09 and started H2 FY09 with a y-o-y decline of 19.63% in the month of October. The rising interest rates, stringent lending norms, falling industrial growth rates and resumption of overloading are the main reasons for the current mayhem in the CV market.
The bottom line of the manufacturers too came under pressure especially in Q4 FY08 and Q1 FY09 due to the increase in input cost. The average steel prices remained high in FY08 and in Q1 FY09 and the rubber prices too started creeping up in Q1 FY09. To recover costs, the manufacturers resorted to a series of vehicle price hikes from beginning of FY09 onwards. This led to a tricky situation where manufacturers increased vehicle prices when demand was actually falling.

The situation at the freight operator end too has been grim for some time now. After seeing a healthy freight rate growth in FY07, the rates came under pressure in FY08. However, as average diesel prices declined in FY08, the operators managed to sail through. In H1 FY09, diesel prices increased but the freight rate hike has not been commensurate with the diesel price hike. As a result, the operator profitability has come under pressure. Also, with rising vehicle cost, rising tyre cost and increased financing cost; the fleet operators are resorting to postponement of new vehicle purchases.

Despite such overcast situation, manufacturers have been trying to boost sales through introduction of new models. A slew of launches were made in FY08, both in the GC and PC segments. For e.g. Force Motors (FM) launched its GC models'M4' (GVW <=3.5 tonnes) and'Traveller Strong' (GVW >3.5 to <=5 tonnes). Tata Motors (TM) launched its tippers'1618' and'2518'. It also launched multi-axle trucks'2516 Super Turbo' and'3118' and Tractor Trailer (TT)'Novus-LPS 4923 TC'. Ashok Leyland Limited (ALL) launched its multi-axle vehicle'3121 H' and TT'4921'. Eicher Motors (EM) launched a multi-axle vehicle'HERCULES 35.31'. In the PC segment, TM launched its PC model'Super Milo Bus Chassis', ALL launched its luxury bus model'Luxura' in addition to two bus models, targeting the Bus Rapid Transport System (BRTS) and an inter-intra city bus model'12m BS II' and Isuzu-Swaraj Mazda (SM) launched a 40-seater luxury bus. A number of launches are lined up for FY09 too.
Recently, the industry also saw a few collaborations between the domestic and the international manufacturers. ALL and Nissan Motor entered into a Joint Venture (JV) for manufacturing LCV, Mahindra & Mahindra (M&M) entered into a JV with Warrenville, a wholly-owned affiliate of Navistar International Corporation for manufacturing diesel engines for M&HCVs, EM and AB Volvo (Volvo) entered into a JV for manufacturing CVs.

In the short term, the industry growth is expected to be weighed down by the adverse macro-economic environment. Though the interest rates are not likely to climb up any more in this fiscal, it will take some time for the availability of credit to improve. In FY09, we expects the GC unit sales to grow between 4-5% while in tonnage terms, the segment is likely to see de-growth of 2-3%. We estimates the GC segment to register a 5-year Compounded Annual Growth Rate (CAGR) of 6-7.5% in tonnage sales. The PC segment is expected to grow between 6-8%.

Report Outline

Section I: Current Status of the Market

Chapter 1 Introduction
1.1 Domestic Market Performance in FY07
1.2 Domestic Market Performance in H1 FY09
1.3 Export Market Performance in FY08 and H1 FY09)

Chapter 2 Domestic CV Market
2.1 Trend of domestic sales of CV
2.2 Segment-wise Domestic market share
2.3 Domestic Market Position category-wise (FY08)

Chapter 3 Domestic Market Growth
3.1 Domestic GC Market Growth Trends
3.2 PC Segment Growth Trends
3.3 Market position of major players (FY 08)

Chapter 4 Exports Market
4.1 Trend of CV Exports
4.2 Export Market segment-wise (FY08)
4.3 Export Market Growth Trends (FY08)
4.4 Market share of players in exports (FY08)
4.5 Player-wise export sales volume and growth (FY08)

Chapter 5 COST
5.1 Raw Material Expense
5.2 Employee Expense
5.3 Selling Expense
5.4 Operating Margins

Chapter 6 Outlook
6.1 Latest trends in the CV market
6.2 Interest rate threat
6.3 Replacement demand
6.4 Competition in horizon
6.5 Growth projections
6.5.1 GC Growth rate estimation
6.5.2 PC Growth rate estimation
6.5 SWOT Analysis

Section II: Industry Basics

Chapter 7 Industry Overview
7.1 Classification
7.2 Evolution of CV industry
7.3 Regulations
7.4. Technical parameters
7.4.1 Engine Power
7.4.2 Loading platform
7.4.3 Turning Circle diameter

Chapter 8 Industry Characteristics & Demand Drivers
8.1 Industry Characteristics
8.1.1 Dependence on Economy
8.1.2 Cyclicality
8.1.3 Capital Intensive
8.1.4 Susceptibility to Technological Change
8.1.5 High Entry Barriers & Oligopolistic nature
8.1.6 Regional Clusters
8.1.7 Forward and Backward Integration
8.1.8 Increasing Indigenization
8.1.9 Segmentation
8.1.10 Duty Structure
8.1.11 Competition
8.2 Demand Drivers
8.2.1 Economy & Infrastructure Development
8.2.2 Fuel Cost & Freight Rate
8.2.3 Vehicle Financing
8.2.4 Government Regulations
8.2.5 Other factors

Section III: Company Profile

Chapter 9 Company Profile
9.1 Tata Motors Limited
9.2 Ashok Leyland Limited
9.3 Mahindra & Mahindra Limited
9.4 Eicher Motors Limited
9.5 Swaraj Mazda Limited
9.6 Corporate Action by other players

Annexures

Annexure 1 Company-wise category-wise GC Models
Annexure 2 Company-wise category-wise PC Models
Annexure 3 Weekly Freight Index
Annexure 4 Domestic GC Unit Sales (FY03-08)
Annexure 5 Domestic PC Unit Sales (FY03-08)
Annexure 6 Export GC Unit Sales (FY03-08)
Annexure 7 Export PC Unit Sales (FY03-08)
Annexure 8 Tata Motors Unit Sales (FY03-08)
Annexure 9 Ashok Leyland Unit Sales (FY03-08)
Annexure 10 Mahindra & Mahindra Unit Sales (FY03-08)

Figures

Figure 1.1 Interest rate trend for used and new vehicles
Figure 1.2 Y-o-Y Growth of Diesel and Freight index
Figure 2.1 Trend of Domestic sales of CV
Figure 2.2 Segment-wise Domestic Market Share FY08 and FY07
Figure 2.3 Domestic Market Position category-wise
Figure 3.1 Y-o-Y GC growth sales trend
Figure 3.2 GC sales distribution in FY08, FY07 and FY03
Figure 3.3 LCV GC sales growth trend
Figure 3.4 M&HCV GC sales growth trend (Excluding Tractor Trailer)
Figure 3.5 Tractor- trailer sales growth trend
Figure 3.6 Y-o-Y PC growth trend
Figure 3.7 PC sales distribution in FY08, FY07 and FY03
Figure 3.8 LCV PC segment growth trend
Figure 3.9 M&HCV PC segment growth trend
Figure 3.10 Market position of major players (FY08)
Figure 4.1 Trend of CV Exports
Figure 4.2 Segment-wise CV Exports
Figure 4.3 Segment-wise Export market sales (FY08)
Figure 4.4 Y-o-Y Growth in CV Exports
Figure 4.5 Segment-wise GC growth
Figure 4.6 Segment-wise PC growth
Figure 4.7 Market share of players in exports
Figure 5.1 Domestic steel price trend (0.63mm CRC)
Figure 5.2 International steel price trend (CR sheets 0.5mm)
Figure 5.3 Rubber prices trend
Figure 7.1 Classification of Automobile Industry
Figure 7.2 Market composition of Automobile Industry
Figure 8.1 Domestic CV sales and IIP trend
Figure 8.2 Sales growth and GDP growth trend
Figure 8.3 Category-wise domestic sales growth rate
Figure 8.4 Market share of all the players in the domestic market
Figure 8.5 Hub and Spoke Model
Figure 8.6 Weekly movement of vehicles
Figure 8.7 Diesel price trend
Figure 9.1 Tata Motors share price trend
Figure 9.2 Tata Motors segment-wise distribution of CV sales
Figure 9.3 Ashok Leyland share price trend
Figure 9.4 Ashok Leyland segment-wise distribution of CV sales
Figure 9.5 Mahindra and Mahindra share price trend
Figure 9.6 Mahindra and Mahindra segment-wise distribution of CV sales
Figure 9.7 Eicher Motors share price trend
Figure 9.8 Eicher Motors segment-wise distribution of CV sales
Figure 9.9 Swaraj Mazda share price trend
Figure 9.10 Swaraj Mazda segment-wise distribution of CV sales

Tables

Table 1.1 Domestic GC sales growth in FY08 over FY07
Table 1.2 Y-o-Y growth in IIP
Table 1.3 Domestic GC sales growth in H1 FY09 over H1 FY08
Table 1.4 CV Production
Table 1.5 GC Export sales growth in FY08 over FY07
Table 1.6 GC Export sales growth in H1 FY09 over H1 FY08
Table 3.1 % sales of 3-wheeler GCs and 4-wheeler LCV GC <=3.5 tonnes
Table 3.2 Y-o-Y 3-wheeler GC Domestic Sales growth
Table 3.3 Y-o-Y growth % of GC sub-segments for all the players
Table 3.4 Y-o-Y growth % of PC sub-segments for all the players
Table 3.5 Top players in different CV segments in Exports
Table 4.1 Y-o-Y growth for each of the GC sub-segments
Table 4.2 Y-o-Y growth for each of the PC sub-segments
Table 4.3 Domestic and exports sale composition
Table 4.4 Top players in different segments in FY08
Table 4.5 Export volumes & growth
Table 5.1 Raw Material Expense as a % of total sales
Table 5.2 Employee Expense as a % of total sales
Table 5.3 Selling Expense as a % of total sales
Table 5.4 PBDILT as a % of total sales
Table 6.1 GC growth projections
Table 7.1 Classification of commercial vehicles on Basis of GVW
Table 7.2 Usage of different segments of GCs
Table 8.1 Regional Clusters
Table 8.2 Proportion of indigenous raw materials & components (FY 08 & FY 98)
Table 8.3 Duty Structure
Table 8.4 % change in diesel prices and freight index
Table 8.5 CV interest rates for past 5 years
Table 8.6 Emission Norms