crisil-auto sector credentials.pdf

8/14/2019 CRISIL-Auto sector credentials.pdf

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CRISILs Auto Sector Credentials


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Key Assignments: Automotive

For OEMs

Demand forecasting (quarterly and annual) for trucks and buses, light trucks, and tippers

for strategic and production planning

Demand forecasting for cars and utility vehicles (quarterly, annual and India/state-wise),

for strategic planning and sales targets

Demand forecasting for 2-wheelers (annual and India/state-wise) for strategic planning

Research partnership with a leading OEM for monitoring developments, and their impact

in areas such as regulatory developments, economic indicators, auto finance, auto fuels

and raw material prices

Demand potential for alternative fuel vehicles

Demand potential for ambulances

State-wise HP-wise monthly demand forecasting of tractors

Competitive benchmarking between OEMs

Rolling four-quarter price forecasts for metals, rubber and polymer inputs

Assessment of credit quality of vendors for OEMs

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Key Assignments: Automotive

For associations Demand forecasts, quarterly and annual, across automobile categories (trucks, light trucks, buses, 3-

wheelers, cars, utility vehicles and 2-wheelers)

Cost index for raw materials used for corrugated boxes

Natural rubber stock estimation and validation

For component and tyre players Auto production forecasts for monthly/quarterly production planning of engine components and

steering components

Demand forecasts for strategic/capacity planning of tyres, auto castings and engine components

Market and opportunity sizing for clutches and segment attractiveness study for each vehicle

segment for investment planning

Short term and medium term demand forecasts for various auto components segments (Mouldedplastic parts, Seating systems, Sheet moulding compound & Bulk moulding compound, Enginecooling systems, Wiring harness, and Batteries)

Market assessment and outlook of truck and tyre business in India and radialisation trends until 2025for annual production planning

For financial sector and others

Daily/Monthly information on auto market developments, based on primary interactions with autodealers and transporters across the country for a leading fund house

Study of used commercial vehicles for a private equity firm interested in taking a stake in a financier

Assessment of credit quality of an OEM for a foreign machinery supplier

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Title:

Short-term and long term demand forecast models across vehicle segments

Objective:

The objective of the study was to provide technical assistance to the client for demand forecasting across vehicle

segments

Approach:

CRISIL Research developed separate demand forecast models for each of the vehicle segments. CRISIL Research

developed demand forecast models, which considered new vehicle as well as replacement demand .

For new vehicle demand forecasts ,CRISIL Research analysed various parameters such as income distribution,

cost of ownership and supply variables (new launches, capacities, used car availability, price points). For short term

demand assessment, we analysed economic factors (GDP, corporate profit, etc.), financial variables (int. rate, EMI,

finance penetration), supply factors (vehicle cost, fuel cost, model launches), demographics and infrastructure.

For replacement demand forecasts, CRISIL Research analysed demand variables (avg. holding period, purchase

transition matrix, propensity to own multiple cars) and supply variables (new launches, capacities, used car

availability, price points).

Commercial vehicle demand model analysed factors such as redistribution freight availability, impact of competing

products and structural changes in the redistribution factor.

Value to Client:

CRISIL Research assisted client to decide on the investment planning strategy based on demand forecasts and

scenario analysis carried out with the help of the models developed.

Case studies


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The approach framework forthe study is formulated anddiscussed with client

This outlines broadly theprocess and tentativetimelines for the study

Analytical Framework for the Engagement

Analytical Framework for Demand Estimation

To assess the demand for eachof the vehicle segments, we

take into account both macro

and micro level factors

We assess the relationshipbetween sales and each of the

demand drivers

We classify these factors intoissues impacting demand for

vehicles

Illustrative coverage for the engagement


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Illustrative output for Long-term forecast of Cars We analyse the relative favourabilityof factors driving the demand for

each of the vehicle segments

We analyse the relative impact onboth short-term and long-term basis

to arrive at the projections

We develop econometric modelsand club judgmental factors to

finalise projections

Post final projections, we back-test

to evaluate the robustness of theframework and methodology

Illustrative output for Short-term forecasts of Cars



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Title:

Benchmarking for a leading automobile manufacturer

Objective:

The client wanted a peer group comparative analysis on financial as well as non-financial parameters and

assessment of their relative performance with reasons for differences thereof

Approach:

CRISIL Research provided the study in three modules as follows:

Benchmarking on performance based on financial parameters, growth trends, export potential etc.

Relative analysis of cost-structures and operations efficiency. Competitive position based on product portfolio, distribution network and marketing strategies for new and existing

products.

Value to Client:

CRISIL Research assisted the client to understand its current market position based on comparables and helped tostrengthen its competitive position by identifying areas for improvement and focusing on strengths

Case studies


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The approach framework for the study isformulated and discussed with client

The framework involved measurement ofbusiness performance of peers based on

assessment of underlying drivers of businessperformance


Illustrative output for benchmarking

To assess the overall business performance, theassessment framework is divided into benchmarking

of business performance and benchmarking the

drivers of business performance

Business performance of players is measured in three

areas, viz. financial performance, domestic market

performance and quality performance

The drivers of business performance are categorisedinto 4 factors: product development capability, vendor

management, operating efficiency and sales & service

These parameters are measured using variousmetrics and assigned scores on 1-5 scale, wherein a

score of 1 indicates poor performance and 5

indicates strong performance

Subsequently, scores of relevant parameters areaggregated into four factors and finally into overall

competitive score for each player



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Title:

State-wise monthly forecasting for tractor demand

Objective:

The client intended to build a robust methodology for forecasting demand for tractors in Indian market

Approach:

Short term forecasting of tractor demand was based upon a weighted average score on key factors that can drive

tractor demand in the short term. The scores was estimated based on information updated monthly. Based on the

scores the rate of demand growth was qualitatively estimated by suitably adjusting the recent growth trend

Interactions with dealers of client and its major competitors at various locations were done to assess various factors

contributing to the movement in demand overtime. An in-house designed questionnaire was shared with theregional/zonal sales managers of the client on a monthly basis to garner feedback/validation on the regional analysis

A framework was prepared for scoring assessment categorising factors that influence tractor demand into those

related to economics of tractor operation and those related to affordability of tractors

Value to Client:

CRISIL Research assisted the client to plan their production and in turn sales based on the forecasted numbers and

accordingly bring focus towards respective state-wise sales

Case studies


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The approach framework forthe study is formulated anddiscussed with client

This outlines broadly theprocess and tentativetimelines for the study


Analytical Framework for Demand Estimation State wise rolling forecastbegins with analysis of long

term trends using the structural

and cyclical parameters over

the next one year

To estimate the short-term

forecast, weighted average

score on key factors that can

drive tractor demand in the short

term, further adjusted for

seasonal factors, is taken

Primary interactions with

dealers, farmers and financiersare done



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Illustrative output for one state in one particular month

We analyse the relative favourability of factors driving the demand for each of the HP segments

We analyse the relative impact on both short-term and long-term basis to arrive at the projections

We develop statistical models and club judgmental factors to finalise projections

Post final projections, we back-test to evaluate the robustness of the framework and methodology


crisil-auto sector credentials.pdf

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