Investomania - List of investments planned in India by Auto OEM's

India has proven to be a frugal hub for Automobile OEM's due to its location and skill advantage. India is a now a part of the global strategy for these OEM's; every company is planning to set up their manufacturing base in the country and are also exploiting its option as an export hub. Indian Auto Industry stands second in Two Wheeler sales, third in Small Cars sales & fifth in Commercial Vehicle Sales. These figures are bound to move towards the numero uno position in the coming years. No doubt India is now the Investment Hot Spot for these Auto Majors. PSA Peugeot Citroen has even made its second entry after leaving its operations in the 90's. Almost all cos. are planning to double their production capacities with the intention to stay competitive in lieu of increasing demand. But at the same time volatile market conditions & unstable government policies are making these OEM's reconsider their plans. And Gujarat has emerged as the blue-eyed state for all major investments and seems to overtake Chennai(TN)/Pune(Maharashtra) as automobile hub.  

The investments are upto a tune of over 40000 crores in the next 4 years. The list is never-ending and looks like -

The plans is to enhance the production capacity to the level of 40 Lakh passenger vehicles. Setting up multiple manufacturing bases is also a part of the location strategy, where the OEM is not completely dependent in terms of manpower/taxes/proximity. The recent labor turmoil in Maruti had literally shut down its overall operations and the damages stood irreplaceable. Even when Maharashtra Govt. lifted its tax benefit, companies such as M&M, VW started looking out for other states as investment options. Gujarat, however due to its Investment friendly policies and low corruption emerged as the darling of OEM's. It would not be an exaggeration to term Tata's shifting its Nano plant to Sanand in an OVERNIGHT. Now companies such as Maruti, Peugeot, Hyundai, Renault/Ford have all approached the state for their Expansion drive.  

A look at how the demographics seems like -

Image Source:Business Today 

Indian Luxury Car Market - A Preview

What is it that makes the segment all that lucrative?

Indian Luxury Car Sales has performed in a time when the Auto Industry was reeling with lower demand and declining sales. The downturn had its impact on all segments of the industry except the luxury space. Name a OEM that manufactures luxury cars and you'll find one in India. Until fifteen years back the only name familiar in the segment was Mercedes. It enjoyed ubiquitous status in the space and was undeterred till the German counterparts arrived. This later led to the rapid influx of almost all luxury OEM's in the Indian market.

The reason was pretty obvious -

As seen, India's luxury car sales contribute only to 0.5% of overall automotive sales. This leaves a huge untapped portion of the market which needs to be leveraged. The volume of the market is nearly 19000 cars/year which is bound to grow by 30-35% and is expected to reach 24k cars in FY 12. The market is currently dominated by German Automakers Mercedes-Benz, BMW & Audi. Lets have a look on their volumes in past 3 years -

BMW was successful in continuously overtaking Mercedes-Benz as the top luxury car maker. The growth has led the OEMs to think very aggressively to improve their stand; For Ex: BMW launching 'India Specific' strategies - pricing the 3 series and X1 under 24 Lakhs (for corporate edition). BMW was also focussed in increasing their outlets across the nation. 

Similarly, Volvo India also launched a similar initiative of lowering its prices for the entry-level S60 sedan. Their outlet strength still remains a concern with only 7 outlets in the country. The OEM is focusing to double the same by F13.    

It is amazing to analyze how the customer profile has changed. Be it the real-estate boom or the growing number of entrepreneurs, purchase of luxury cars remains the symbol of Power, Recognition, Independence & Status. A local farmer from Kolhapur is purchasing a Merc, a beedi factory owner from Raipur is buying a BMW, young IT professional from Pune is owning an Audi, young inherited industrialist from Delhi is driving a Ferrari - one can see the variance in the customer profile and also their similar inclination towards luxury cars. The emergence of the rural India has again increased the market for these cars - who had expected Mercedes-Benz to sell 113 Mercs at Aurangabad & 180 Mercs at Kolhapur in one shot!

A view on the segments and the players -
Sedans:

SUV's:

Ultra-Luxury/Supercars:

The above list is bound to increase and so does its sales.  The attractive financing schemes has also attracted the luxury C-segment car buyers to jump to this segment (Currently BMW is offering its X1 at an EMI of Rs. 15,999!). Second hand car market (used car business) will also grow - Merc & BMW have already jumped into the bandwagon assessing its potential.

With F1 coming in, the craze has put the nation on its toes. The love for luxury cars had raised to the next level. It will be interesting to see how the coming years shape this segment of the market.

Indian Car Sales Figures - February 2012

February 2012 Sales Figures - Pan India

1) Maruti repeats its success – crosses 1 Lakh figure AGAIN! Alto tops again with >32k nos. Sign of sustenance for the Auto Industry.

·         2) Nissan’s Caaaar amazes all with its “Sunny” side – Does 3130 nos.

·         3) Pulse doesn’t affect Micra. Micra does all time high of 2198 nos.

·         4) Mahindra fulfill its promise of increasing its production of XUV 500. Was successful in supplying 2729 XUV’s to its dealers.

·         5) One can see the ‘refresh’ in Xylo numbers. Its numbers increase by 50% (2796) over Jan’12 figures.

·         Innova still remains the people’s choice. With 6271 numbers, one wonders what Toyota would’ve done without Innova!

·         6) Eon crosses 10k for the first time since inception. Did someone tell, it was the end of petrol era?

·         7) Swift carries its name in its performance as well. The numbers have swiftly climbed and even crossed 20k. With better supplies we expect Maruti to sustain the volumes as well.

·         8) 'Dzire Again’ – emerges 3rd bestselling vehicle.

      9) Honda bounces back with its 'exceptional' City and announces its arrival (after the Japan Quake & Thai flood) by churning 6052 numbers.

     10) Skoda has 'RAPID'ly overtaken its cousin Vento's numbers with 2204 nos (Vento - 2174 nos).   

      A list of the top 20 brands of the month -