boozco india automotive market 2020
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Booz & Company
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
Prepared for client name 2India Auto Market.ppt
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
Prepared for client name 3India Auto Market.ppt
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
Prepared for client name 4India Auto Market.ppt
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
Prepared for client name 5India Auto Market.ppt
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
Prepared for client name 6India Auto Market.ppt
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
Prepared for client name 7India Auto Market.ppt
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
Prepared for client name 8India Auto Market.ppt
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
Prepared for client name 9India Auto Market.ppt
The result: India is an anchor of future growth in the auto industry
GDP Growth by Country2010 – 2020
Source: Global Insight Database, Booz & Company analysis
> 5% projected GDP growth
3.5 % - 5% projected GDP growth
< 3.5% projected GDP growth
Booz & CompanyDATE
Prepared for client name 10India Auto Market.ppt
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
Market size: 205 M unitsAsia & Japan: 65%
Europe: 20%NA: 15%
2020
Market size: 60 M unitsAsia & Japan: 7%
Europe: 42%NA: 41%
1980
Shift in center of gravity
Booz & CompanyDATE
Prepared for client name 11India Auto Market.ppt
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
Prepared for client name 12India Auto Market.ppt
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)
Source: Global Insight Database, Booz & Company analysis
Booz & CompanyDATE
Prepared for client name 13India Auto Market.ppt
Sal
es V
olum
e (in
thou
sand
s of
uni
ts)
India will soon be bigger than most other markets
Western Europe (2009) and India (2009)
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
Source: Global Insight Database, Booz & Company analysis
Booz & CompanyDATE
Prepared for client name 14India Auto Market.ppt
Much earlier than 2020, India will exceed the major EU markets
Western Europe (2015) and India (2015)
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
Prepared for client name 15India Auto Market.ppt
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
Prepared for client name 16India Auto Market.ppt
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
Prepared for client name 17India Auto Market.ppt
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
Prepared for client name 18India Auto Market.ppt
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
Prepared for client name 19India Auto Market.ppt
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
Prepared for client name 20India Auto Market.ppt
For more information please contact:
Chicago
Vikas SehgalPartner+1-312-578-4828vikas.sehgal@booz.com
Booz & CompanyDATE
Prepared for client name 21India Auto Market.ppt
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”
in 2010.
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