india automotive market 2020uru.ac.in/.../india-automotive-market-2020.pdf · india automotive...

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This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

India Automotive Market 2020

Delhi, 2011

Booz & CompanyDATE

Prepared for client name 1India Auto Market.ppt

The key 5s

1. Going forward, India is a key pillar of global automotive market - policy, actions and strategies of players in India will have a fundamental impact on the global auto landscape

2. By 2015, India will exceed every major European market inc. Germany, France and UK in automotive sales - making India the 4th largest automotive market by volume in the world

3. Over the next 20 years, India will be part of global automotive triumvirate - the global BIG 3

4. In fact, we expect the India automotive sales to exceed the US market by mid 2030s

5. The global automotive game will be pretty much decided by twin forces for China and India

Booz & CompanyDATE


India is booming – and projected to maintain the trajectory

Regional: Percentage of World GDP

2004India

2%China4%

Japan12%

EU34%

US28%

Other20%

2050 Estimate

Japan4%

EU15%

US26%

Other10% India

17%

China28%

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

China

India

Thailand

Real GDP Growth2005-2020

Germany

United Kingdom

Gro

wth

Rat

e (B

ase=

2005

)

Source: Global Insights Database, Business Week, Booz & Company analysis

Booz & CompanyDATE


Emerging markets are transforming the economic landscape — could the future repeat the past ?

Note: UK, US and W. European countries do not include GDP from former British coloniesSource: The World Economy-Historical Statistics; Goldman Sachs BRIC Report; Booz & Company research and analysis

0%

20%

40%

60%

80%

1800 1850 1900 1950 2000 2050

Perc

enta

ge C

ontr

ibut

ion

to W

orld

Eco

nom

y

1500

Year

India & China

UK

Western Europe (excluding UK)

India & China

UK

Western Europe (excluding UK)

US

1850 1900 1950 2000 20500%

20%

40%

60%

80%

Percent Contribution of India & China, US, Western Europe and UK to World Economy

(1500–2050 AD)

Booz & CompanyDATE


An assessment of parallels with markets such as China strengthen our belief in tomorrow

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1 3 5 7 9 11 13 15 17 19 21 22 25 27$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27

China – 1979 India – 1991

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

1 3 5 7 9 11 13 15 17 19 21 23 25 27

In $

Mn

Years Since Liberalization

In $

In $

Bn

GDP Growth GDP Per Capita Growth FDI Trends – India and China

Years Since Liberalization Years Since Liberalization

Source: Economic Intelligence Unit, Booz & Company analysis

Booz & CompanyDATE


GDP Trends2005 Constant Prices ($Trillion)

The twin pillars of the global economy, India & China, will define the economic landscape for generations to come

Real GDP Growth(Base = 2005)

0

1

2

3

4

5

6

7

8

9

10

11

2000 2010 2020 2030 2040

China

Russia

JapanGermany

Growth relative to 2005

Pakistan

India

2000 2010 2020 2030 2040

20

Germany

0

Japan

China

5

$ Trillion25

15

PakistanRussia

India10

Source: Global Insight Database, Booz & Company analysis

Booz & CompanyDATE


Wealth is being generated via a positive structural shift in the economy

56%

29%22%

15% 11% 8%

14%

36%38%

37% 40% 42%

30% 35% 39%48% 49% 50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1950 1990 2000 2007 2012 2020

Agriculture Industry Services

Shift in GDP composition by sector(1950 to 2020E)

% c

ontri

butio

n to

GD

P

Source: Global Insights Database, Economic Intelligence Unit, Booz & Company analysis

Booz & CompanyDATE


Industry is likely to benefit from the change in consumption pattern of an increasingly prosperous society

Private Consumer Spending1994-2015

% c

onsu

mpt

ion

of to

tal

11%

20%

23%

3%

5%

4%

15%

16%

13%

6%

7%

8%

2005

9%

3%

40%

1994

6%3%

100%

Miscellaneous

Recreation / Education

Transport / Comm.

Health

Housing

Clothing & Footwear

Food & Beverages

2015

19%

5%

29%

55%

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1990 1995 2000 2005 2010 2015

Index

Recreation

Food & Beverages

Total Consumption

Transport / Comm.

Note: Miscellaneous includes personal care goods and other servicesSource: Central Statistics Organization (GOI), Booz & Company analysis

Private Consumption GrowthBase - 1994

Booz & CompanyDATE


This rise in per capita GDP will lead to higher vehicle ownership

0

50

100

150

200

250

300

350

400

450

500

550

600

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000

GDP / Capita

Cars / 1000 PeopleCars / 1000 People Versus GDP / Capita

1990 - 2013

Source: Economist Intelligence Unit; Booz & Company analysis

India

Russia

China

USA

Germany

Saturated penetration levels in developed economies

Rising per capita income leading to increased penetration; trend expected

to continue given low current levels

Booz & CompanyDATE


The result: India is an anchor of future growth in the auto industry

GDP Growth by Country2010 – 2020


> 5% projected GDP growth

3.5 % - 5% projected GDP growth

< 3.5% projected GDP growth

Booz & CompanyDATE


Automotive sales are destined to resonate with global economic shift -

India is the place to be for the global OEMs

1010

1) Includes passenger vehicles, commercial vehicles and two-wheelersSource: Global Insight Database, March 2009; Wards Auto; Booz & Company analysis

Automotive Sales by Geography(Passenger Vehicles, Commercial Vehicles and Two Wheelers)

Market size: 102 M unitsAsia & Japan: 45%

Europe: 32%NA: 18%

2009


Europe: 20%NA: 15%

2020


Europe: 42%NA: 41%

1980

Shift in center of gravity

Booz & CompanyDATE


India’s car market has the potential to grow up to 6+ millions units annually by 2020

Passenger vehicle sales in India(2001 – 2020)

Note: Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etcNote: Aggressive scenario – 14% CAGR upto 2015, after which market stabilizes (based on similar growth seen in the Chinese markets under similar macroeconomic conditions)

Base Scenario – 8% CAGR over 2009-2020; based on historical growth trends of the Indian car marketConservative Scenario – 6% CAGR; car sales negatively impacted by economic downturn or unfavorable government policies (high interest rates, financing not easily accessible, etc)

Source: Global Insight database, Booz & Company Analysis

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Million Units

6.0

5.0

4.0

3.0

2.0

1.0

0.0

0.5

Consensus

Aggressive

Base Case

Conservative

1.5

2.5

3.5

4.5

5.5

6.5

Spain Car Sales 2008 - 1.6 M Units

Italy Car Sales 2008 - 1.9 M Units

Germany Car Sales 2008 - 3.1 M Units

Booz & CompanyDATE


2,534 2,4882,289

1,446

640 538 530369 320 316 280 196 192 174 147 141

530

3920

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

GERMANY

ITALY

UNITED KIN

GDOMFRANCE

SPAINNETHERLANDS

BELGIUM

INDIA

PORTUGALAUSTRIA

SWITZERLA

NDSWEDENGREECEDENMARK

IRELA

NDNORWAY

FINLA

NDIndia will soon be bigger than most other markets

Western Europe (1998) and India (1998)

Sal

es V

olum

e (in

thou

sand

s of

uni

ts)


Booz & CompanyDATE


Sal

es V

olum

e (in

thou

sand

s of

uni

ts)

India will soon be bigger than most other markets


4,035

2,6782,360

2,216

1,071

581 451 349 294 247 236 203 131 126 102 64

2,262

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

GERMANYFRANCE

ITALY

INDIA

UNITED KIN

GDOM

SPAINBELGIU

MNETHERLANDS

AUSTRIASWITZE

RLAND

SWEDENGREECE

PORTUGALDENMARK

NORWAYFIN

LAND

IRELA

ND


Booz & CompanyDATE


Much earlier than 2020, India will exceed the major EU markets


Sal

es V

olum

e (in

thou

sand

s of

uni

ts) 3,693

2,598 2,566 2,434

1,624

617 608342 341 323 299 245 203 171 160 151

5,070

-500

500

1,500

2,500

3,500

4,500

5,500

INDIA

GERMANY

UNITED KIN

GDOMFRANCE

ITALY

SPAINNETHERLANDS

BELGIUM

SWEDENAUSTRIA

SWITZERLA

NDPORTUGAL

GREECEDENMARK

NORWAYFIN

LAND

IRELA

ND

Note: Forecasts for 2015 Source: Global Insight Database, Booz & Company analysis

Booz & CompanyDATE


India and China dwarf existing automotive markets such as Germany or UK

Automotive sales volume by country2030

Note: 2030 sales and GDP projections are based on annual GDP growth rates projected by country per GS BRIC reportSource: Global Insight Database, March 2009; Goldman Sachs BRIC Report; Booz & Company analyses

1 M - 3 M

3 M - 10 M

> 10 M

Number of unit sales

< 1 M

Potential for Indian market to reach revenues of $150 - $200

billion

Potential for Indian market to reach revenues of $150 - $200

billion

Booz & CompanyDATE


By 2030, India will be among the GLOBAL BIG 3

Note: Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etcSource: Global Insight Database, Booz & Company analyses

Light Passenger Vehicle Sales Projections - 2030 Million Units

1.9

GERMANY

3.7

ITALY

2.4

RUSSIA

5.2

2

2.9

UNITED STATES

11.7

INDIA

7.8

CHINA

40.7

Million units

8

6

42

4

16

14

12

10

FRANCE0

17.6

BRAZIL UNITED KINGDOM

2.4

SPAIN

Booz & CompanyDATE


14%

4%

9%

4%0%0%

8%

15%

46%

0%

10%

20%

30%

40%

50%

60%

CBA OtherPUPSUVMPVE&FD

% of total car sales

0%

10%

20%

30%

40%

50%

60%

% of households

Indian household income & car sales distribution2008

We expect not just a quantitative but also a qualitative change in the market…

< $1K $1K - $3K $3K - $5K $5K - $10K $10K - $15K $15K - $25K $25K - $35K $35K - $50K $50K - $75K > $75K

Household income distribution

Distribution of car sales by segment

Car SegmentsIncome

distribution

Source: Global Insight 2009, Booz & Company Analysis

Booz & CompanyDATE


0%

10%

20%

30%

40%

% of households

12%

5%

12%

5%

0%2%

11%

20%

33%

0%

10%

20%

30%

40%

50%

60%

% of total car sales

OtherPUPSUVMPVE&FDCBA

Indian household income & car sales distribution2030

The market of tomorrow will reflect increased prosperity of the nation

< $1K $1K - $3K $3K - $5K $5K - $10K $10K - $15K $15K - $25K $25K - $35K $35K - $50K $50K - $75K > $75K

Household income distribution

Distribution of car sales by segment

Car SegmentsIncome

distribution

Source: Global Insight 2009, Booz & Company Analysis

Booz & CompanyDATE


Interestingly, India’s market is expected to overtake the US auto sales by ~2035

Note: Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etcSource: Global Insight Database, Booz & Company analyses

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Thousand Units60,000

55,000

50,000

5,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

0

UNITED STATESINDIA

CHINA

Light Vehicle Sales Projections - US, China, India2004-2040, Thousand Units

Chinese automotive sales exceeds U.S

India’s automotive sales is expected to exceed U.S

Booz & CompanyDATE


For more information please contact:

Chicago

Vikas [email protected]

Booz & CompanyDATE


Booz & Company is a leading global management consulting firm, helping the world’s top businesses, governments, and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914.

Today, with more than 3,300 people in 61 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. The independent White Space report ranked Booz & Company #1 among consulting firms for “the best thought leadership”

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