India is the seventh largest vehicle manufacturer, the second largest two wheeler manufacturer and the fifth largest commercial vehicle manufacturer in the world. The country exports almost 12% of the vehicles produced by it to the most competitive auto markets globally. The past ten years have witnessed a six fold increase in the auto industry turnover and the automotive exports have grown by almost twenty times. The automotive industry today contributes 22% to the manufacturing GDP and 21% of the total excise collection in the country. In 2010-11, the total turnover and export of the Automotive Industry in India reached new pinnacle of US$73 billion and US$11 billion respectively with the cumulative announced investments reaching US$30 billion.

India is the seventh largest vehicle manufacturer, the second largest two wheeler manufacturer and the fifth largest commercial vehicle manufacturer in the world. The country exports almost 12% of the vehicles produced by it to the most competitive auto markets globally. The past ten years have witnessed a six fold increase in the auto industry turnover and the automotive exports have grown by almost twenty times. The automotive industry today contributes 22% to the manufacturing GDP and 21% of the total excise collection in the country. In 2010-11, the total turnover and export of the Automotive Industry in India reached new pinnacle of US$73 billion and US$11 billion respectively with the cumulative announced investments reaching US$30 billion.

Facts & Figures:

Production: The cumulative production data for April-October shows overall production growth of 13.69 percent over same period last year. However, production of passenger cars and buses have registered de-growth during this time. Production in October 2011 also registered de-growth at (-) 1.80 percent as compared to October 2010.

Domestic Sales: The overall sales growth rate recorded for April-October 2011 was 11.81 percent. However, the month of October 2011 registered de-growth at (-) 1.05 percent as compared to October 2010. Passenger Vehicles segment declined by (-) 1.77 percent during April-October 2011 over same period last year. Passenger Cars recorded de-growth of (-) 5.05 percent, Utility Vehicles grew by 8.35 percent and Vans grew by 13.21 percent in this period. In October 2011, Passenger Cars, Utility Vehicles and Vans recorded de-growth at (-) 23.77 percent, 0.41 percent and (-) 17.57 percent respectively. And growth in overall Passenger Vehicles declined at (-) 20.25 percent in the month of October 2011. The overall Commercial Vehicles segment registered growth of 17.95 percent during April-October 2011 as compared to the same period last year. While Medium & Heavy Commercial Vehicles (M&HCVs) registered growth of 8.19 percent, Light Commercial Vehicles grew at 26.64 percent. However, in the month of October 2011 over October 2010, the growth in sales of the overall CV segment was 18.53 percent. Three Wheelers sales recorded a de-growth of (-) 0.38 percent in April-October 2011. While Passenger Carriers registered decline by (-) 3.94 percent during April-October 2011, Goods Carriers registered growth of 15.84 percent. Two Wheelers registered a growth of 14.84 percent during April-October 2011. Mopeds, Motorcycles and Scooters grew by 9.90 percent, 13.81 percent and 21.23 percent respectively. If we compare October 2011 to October 2010, the growth figures for two wheelers was substantially lower at 2.01 percent. Three Wheelers registered decline and the growth rate was (-) 2.06 percent in the month of October 2011.

Exports: During April-October 2011, overall automobile exports registered a growth rate of 29.70 percent. Passenger Vehicles registered growth at 19.52 percent in this period. Two Wheelers, Commercial Vehicles and Three Wheelers segments recorded growth of 29.86 percent, 26.84 percent and 45.47 percent respectively during April-October 2011.

In October 2011 compared to October 2010, overall automobile exports registered a growth of 14.55 percent.

Projects Galore

Toyota Kirloskar Motor Pvt Ltd (TKML), a subsidiary of Japan's Toyota Motor Corp (TMC), plans to invest another Rs 780 crore at its Bidadi plant near Bangalore. Necessary clearances from the Karnataka Government are awaited. An additional 16 acre of land for expansion is sought for engine manufacturing and components for its small cars in India.

Honda’s wholly-owned subsidiary, Honda Motorcycle and Scooter India (HMSI) has laid the foundation stone for its third two-wheeler production plant in the country at Narsapur Industrial Area, which will be spread across 3,50,000 sq mtr. This unit located in Karnataka will have an annual production capacity of 1.2 million units in the first phase at a cost of Rs 1,350 crore. This unit will be ready by the first half of 2013.

Eicher Motors has announced in the recent past that it will be setting up a new manufacturing facility for Royal Enfield motorcycles at Oragadam near Chennai. This unit will be a 50 acre facility having a capacity to produce about 1.5 lakh bikes per annum. The facility is expected to be ready by March 2013. The investment involved is Rs 350 crore spread over the next 4-5 years.

Future Estimates

‘The growth figures that we are now working out for the 12th Five Year Plan indicate a rise in domestic vehicles sales to 5.6 million and exports to 1.3 million by the end of 2017’, said Dr. Pawan Goenka, President, SIAM and President – Automotive & Farm Equipment, Mahindra & Mahindra while addressing the gathering at the SIAM’s 51st Annual Convention. The challenges for the industry lie in adopting new technologies and improving the fuel efficiency and manufacturing capacity at a larger scale. As per ICRA analysis, the two-wheeler industry in India is expected to report a volume growth of 13% in the current financial year and a volume CAGR of 10% to 12% over the next five years to reach a size of 21 to 23 million unit by 2015-16.