Tuesday, March 6, 2007

Indian Automotive Industry and the E and D segment

There were only a few handfuls of cars in the Indian market in the 1980s. Most of these were outdated models like Hindustan Motors' Ambassador (which is still produced and sold). The only car with the latest technology then was the Maruti 800. Since then the market has grown with over 20 manufacturers and hundreds of models and variants. The Maruti 800 is at the lower end of the price range costing Rs. 200,000 (approx US $4,000) and Bugatti Veyron at the other with a price tag of Rs. 125,000,000 ($2.7 million) (import taxes and duties extra).[1]

With the potential to emerge as one of the largest in the world India is presently

2nd largest two wheeler market in the world

4th largest commercial vehicle market in the world

11th largest passenger car in the world and is expected to be the 7th largest market by 2016

The size of the Indian automotive industry is expected to grow at 13% p.a over the next decade to reach around USD 120 - 159 bn by 2016. (SIAM 2006) The passenger vehicle sales in India crossed the one million mark in 2005.



[1] Indian Automobile Industry, http://en.wikipedia.org/wiki/Cars_in_India

D-Segment

The D segment grows at 10-15% annually. Goldman Sachs has predicted that India will have the maximum number of cars on the planet by 2050 overtaking the United States. The high growth potential in the D segment has resulted in many foreign car manufacturers entering the Indian market to tap this market.

MODEL

1999

2000

2001

2002

2003

2004

2005

Accent

1,689

16,205

16,267

20,003

25,002

24,383

25,345

Ikon

1,677

17,402

15,218

14,970

18,565

24,536

24,567

City

9,167

10,555

9,223

11,840

14,355

30,786

36,346

Lancer

7,621

7,991

6,438

5,935

2,961

2,509

2,210

Corsa/Wagon

0

4,069

5,805

7,109

6,829

5,680

4,869

Baleno

352

4,142

1,347

648

1,816

6,521

4,235

Optra

0

0

0

0

4,247

9,191

8,214

Petra/Siena/Weekend

3,642

2,471

1,042

2,746

914

1,157

1,362

Others

41,550

36,108

619,776

643,947

827,407

956,809

1,035,889

Total

65,698

98,943

675,116

707,198

902,096

1,061,572

1,143,037

E-segment

The nation was home to an estimated 83,510 people with financial assets of at least $1 million at the end of 2005, up 37 percent from two years earlier, according to the 2006 World Wealth Report published June 20 by Merrill Lynch & Co. and Cap Gemini SA.

Rolls Royce, Bentley and Maybach are examples of the few high end automobile manufacturers to enter India in the recent years.

Analysts[1] estimate the Indian premium car market at less than 2,500 cars a year, growing at about 15 per cent a year. Take the smaller and less expensive Mercedes-Benz C-Class out of that list, and the number shrinks to 1,700 units -- less than 2 per cent of the passenger car market (source: SIAM).

DaimlerChrysler (Mercedes-Benz)[2]

  • It entered the Indian market in the late 1990’s by introducing the E-class.

  • Year
  • Number of cars sold
  • 2001
  • 1208
  • 2003
  • 1381
  • 2004
  • 1581
  • 2005
  • 1815

  • By 2010, it hopes to sell 4,000 units a year.

Porsche AG

In dec 2006 Porsche AG opened its first dealership in India. Within a week of a launch, Porsche dealers claim to have taken 19 orders in Delhi and 12 in Mumbai, mostly for the Cayenne SUV. [3] The showroom in New Delhi will be followed by outlets in Bangalore, Hyderabad and Mumbai. The cheapest Porsche Cayenne costs $114,000 after a 112 percent import duty, compared with a price of $65,300 in Germany. The company expects Indian sales of the 911 Carrera and Cayenne sport-utility vehicles to rise more than 50 percent to 200 units in 2007-08.

BMW[4]

Will begin assembling cars in India in April 2007 and expects to produce 1,000 vehicles in its first year of operations at its plant in Chennai and increase it to 1,700 cars in 2008

BMW's plant in Chennai is the group's fifth in Asia and will make 3 and 5 series exclusively for the Indian market. The luxury carmaker reported sales of 257 cars in India last year out of combined sales of luxury brands like Mercedes-Benz, Lexus and Audi.



[1] Prasad Sangameshwaran, July 21, 2005, Lessons that Mercedes learnt in India, <>

[2] “DaimlerChrysler turns the corner”, Das,25 May 2004,<>

[3] http://www.bloomberg.com/apps/news?pid=20601100&sid=augvLVaaxfRY&refer=germany

[4] “BMW to commence production in March 2007”, 8 February 2007

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