Indian Passenger Vehicle Industry: ‘Small is beautiful’ report ( http://www.bharatbook.com/detail.asp?id=129357&rt=Indian-Passenger-Vehicle-Industry.html ) assesses that Owning a car is aspired by every Indian household and with low penetration, increasing income levels and resumption of buoyancy in the economy, the opportunity in the passenger vehicle market is humungous. At present, around 30 out of every 1,000 households in India own a car. Even if the households that can afford owning a car are considered, the penetration is as low as 45 per cent. Having said this, of the households affording a car, around 70 per cent fall at the bottom of the income distribution pyramid and can afford owning a small car only. Furthermore, the excise duty on small car is lower at 8 per cent as against 20 per cent on big cars. This would translate into strong growth in the small car segment. The factors like households affording big cars but opting for small cars on account of their easier maneuverability given the traffic chaos and parking constraints in metros and poor infrastructure and congested agglomerations in smaller towns would help pushing the small car sales growth. Furthermore, rich households opting for small cars as their additional cars either for female or young members in the family or for smaller trips would also push small car sales.
Nano is foreseen to give a supply-side push to the small car sales, as its first year cost of ownership, which typically determines the threshold income levels for buying the vehicle, is around 25 per cent lower than Maruti’s 800, the next cheapest available car. This has added 1 million households that can afford buying a car by 2013-14. The Original Equipment Manufacturers (OEMs) have taken into cognizance the humungous opportunity in small car sub-segment. Four out of the six launches till date in calendar 2009 fall in small car sub-segment, which includes Tata Nano, Maruti Ritz, Fiat Punto and Honda Jazz. Only Tata Manza and Chevrolet Cruze (General Motors) fall in mid-size sub-segment. Eight more launches are expected in the small car sub-segment in the next 15-18 months.
It developed a detailed statistical model that attempts to forecast the domestic passenger vehicle sales. The sales are segregated between personal use and commercial use on the basis of interaction with the industry and analytical acumen. Vehicle sales for commercial sales are forecasted on the basis of service sector GDP growth, while the vehicle sales for personal use are forecasted on the basis of ownership cost and the target household that can afford to own a car. Other qualitative factors like macro-economic outlook, consumer confidence, willingness of vehicle financers to finance purchases, actions of OEMs like launches, aggressiveness, sales push techniques, delaer network etc have also been quantitatively built in the demand forecasting model.
The report is divided into four sections. Section I presents viewpoint on the industry that covers domestic and export sales forecasts for the next five years and outlook on the profitability for next 15 – 18 months. Section II provides an in-depth study of the Indian passenger vehicle industry encompassing its evolution and the trends in the last five year. Section III provides profile of key players in the industry, while Section IV contains technical aspects and various key data tables as an Annexure to the report.
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