India to be a major manufacturing hub for automobiles with sales up to 9% up between 2016 and 2017

SOURCE: SIAM

By Charles Moreira

The Society of Indian Automobile Manufacturers (SIAM) sees India becoming a major manufacturing hub for automobiles, with exports of passenger vehicles likely to grow further.

The automotive industry body expects India’s domestic sales of 3,046,727 passenger vehicles between April 2016 and March 2017 to go up 9.23%, over the 2,789,208 sold in the corresponding 2015-2016 financial year.

India’s automotive industry contributes almost 49% of the country’s manufacturing GDP and about 7.1% of the total GDP. The industry altogether employs over 6.5 million people. India’s passenger vehicle market registered its highest ever monthly dispatches at 29.8 million units in July 2017, thereby accruing higher revenue for the government.

Altogether, India’s automotive industry produced a total of 25,316,044 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle during the 2016-2017 period or 5.41% up on the 24,016,599 produced in 2015-2016. Overall domestic sales over these two periods were 2,18,62,128 and 20,468,971 vehicles respectively.

Here, passenger vehicles include passenger cars, utility vehicles and vans, which grew by 3.85%, 29.91% and 2.37% respectively during April 2016 to March 2017 over the corresponding period last year.

However, two-wheelers have the lion’s share of India’s domestic vehicle market, accounting for 80% share in the 2015 – 2016 period, followed by passenger vehicles with 14%, commercial vehicles and three-wheelers with 3% share respectively.

The overall commercial vehicles registered a growth of 4.16% in April-March 2017 as compared to the same period last year. Medium & heavy commercial vehicles grew by 0.04% and light commercial vehicles grew by 7.41% during April-March 2017 over the same period last year.

Three wheeler sales declined by 4.93% percent in April-March 2017 over the same period last year. Passenger carrier sales declined by 8.83% and goods carrier sales grew by 12.75% in April-March 2017 over April-March 2016.

Two wheeler sales registered a growth at 6.89% during April-March 2017 over April-March 2016. Two wheelers include scooters, motorcycles and mopeds, and they grew by 11.39%, 3.68% and 23.02% respectively in April-March 2017 over April-March 2016.

SIAM’s membership includes wholly Indian automotive manufacturers, Indian joint ventures with Japanese automotive manufacturers or India-based subsidiaries of Japanese, South Korean, European or American automotive makers.

According to SIAM market share figures for the 2016 – 2017 period, Maruti-Suzuki had the lion’s share of 47.38%, followed by Hyundai Motor India (16.72%), Honda Cars (6.88%), Mahindra & Mahindra (7.75%), Tata Motors (5.66%), Toyota Kirloskar Motor (4.7%), Renault India (4.43%), Ford Motor India (3%), Nissan Motor India (1.88%) and Volkswagen India (1.64%).

According to the Economic Times of 11 May 2017, India’s largest car maker Maruti Suzuki India increased its market share from 46.79% in 2015-2016 to 47.38% in 2016-2017. This increase is believed to have been helped by the company’s launch of new models such as the Vitara Brezza and the Baleno, as well as the company’s aggressive marketing strategy.

Hyundai Motor posted a growth of 5.24% by selling 509,705 units in 2016 – 2017 but its market share of 16.72% was down slightly from 17.36% in 2015-2016.

Renault India’s share grew impressively from 2.57% to 4.43%, thanks to the success of its Renault Kwid hatchback, of which the company sold 109.000 units in 2016 – 2017.

Ford India was the third largest passenger vehicle manufacturer and made 252,959 units between April 2016 – March 2017. It sold 91,405 units in the domestic market over that period, up an impressive 14.93% growth over 2015 – 2016. Ford India overtook Maruti Suzuki in exports and came second for exports over that period.

Mahindra & Mahindra remained India’s third largest automotive manufacturer, despite its market share decline to 7.75% in 2016 – 2017 from 8.47% in the 2015 – 2016 period.

Honda Cars’ market share also dropped from 6.88% to 5.15%, whilst its sales was also down by about 18% with 157,000 vehicles sold in 2016 – 2017 from 192,000 sold in 2015 – 2016.

Over the same periods, Nissan Motor India’s market share rose from 1.44% to 1.88%, thanks to the Datsun Redi-Go. Toyota Kirloskar Motor and Volkswagen also saw their domestic market share increase to 4.70% and 1.64% respectively.

Exports

Overall automobile exports declined by 4.50% in April 2016 to March 2017. Passenger vehicles and commercial vehicle exports grew by 16.20% and 4.99% respectively, exports of three wheelers and two wheelers declined by 32.77% and 5.78% respectively in April-March 2017 over April-March 2016.

Hyundai Motor continued to be India’s largest passenger vehicle exporter in 2016 – 2017, followed by Ford India. Amongst India’s top ten exporters are Renault India, Tata Motors, Honda Cars India and Mahindra & Mahindra.

According to SIAM, Hyundai Motor India exported 167,120 units in 2016 – 2017, up 3%. Hyundai from 162,221 units exported in 2015 – 2016. Hyundai’s top three products exported were the Creta with over 45,000 units, Grand i10 with around 48,000 units, and sub-4 meter sedan Xcent with around 28,000 units.

Ford India’s exports were up to 158,469 units in 2016 – 2017 over 110,840 units in 2015 – 2016. For 20 years now, Ford India hase been working to build and strengthen India as centre of manufacturing excellence with products exported to over 50 markets worldwide, including parts of ASEAN, Europe, Middle-East and Africa among others, with plans to export its Ecosport SUV from its plant in Chennai to the United States from 2018.

Maruti Suzuki’s exports were down 1.5% from 123,850 in 2015 – 2016 to 122,039 in 2016 – 2017. Of these, 50,000 were the Maruti Suzuki Baleno. Nissan Motor India, along with its sister brand Datsun, saw its exports from India down 2% from 111,000 units in 2015 – 2016 to 109,000 units in 2016 – 2017. The company exports one-third of its India-based production. Volkswagen India exported 86,852 units from India in 2016- 2017, up from 75,989 units in 2015 – 2016, thanks to demand from countries such as Mexico.

Whilst General Motors India saw its domestic sales plunge 20% in 2016 – 2017 over 2015 – 2016, its exports were up over 90%, having exported 70,969 units in 2016 – 2017 up from 37,082 units in 2015 – 2016.

Renault India’s exports were up in a huge way from a mere 144 units exported in 2015 – 2016 to 10,641 units in 2016 – 2017, due to strong demand of Renault Kwid in countries like Nepal, Sri Lanka, and others. Tata Motors exported 4,380 of its passenger vehicles in 2016 – 2017, up 2% over 2015 – 2016.

Overall, Indian automobile industry exported a total of 758,830 units of passenger vehicles in FY 2016-17 as against 653,053 units in FY 2015-16, thereby registering a growth of 16.2%. Also, last fiscal saw the highest ever exports of cars and utility vehicles from India. The industry exported 602,341 units of cars and 154,153 units of utility vehicles out of the country.