automotive economics - umtri · huge auto industry implications from rise of brics source: ihs data...

CSM Worldwide + IHS Global Insight Automotive Group = IHS Automotive

Automotive Economics:Where Does India Go From Here?

Charles Chesbrough

Senior Economist

IHS Automotive

[email protected]

April 20, 2011


Copyright © 2011 IHS Inc. All Rights Reserved.

Presentation Outline

• Economic Forces and Implications

• Vehicle Sales Forecasts

• Summary



3

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

World US Japan EuroZone

Brazil Russia India China

200720082009201020112012

World Economic Growth BRICs To Outpace Advanced Economies

Annual R

eal G

DP

Gro

wth

(in

perc

ent) Japan Crisis Having

Limited Global Impact

Higher Oil Prices Biggest

Threat To Forecast

Source: IHS Data Insights


Copyright © 2011 IHS Inc. All Rights Reserved. 4

Unemployment Rate Consumer Prices

41.0

42.0

43.0

44.0

45.0

46.0

47.0

48.0

49.0

2009 2010 2011 2012 2013 2014 2015 2016 2017

Old Forecast

New Forecast

Exchange Rate: Rupee/US $

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2009 2010 2011 2012 2013 2014 2015 2016 2017

Old Forecast

New Forecast

Interest Rate Policy %

Forecast Review: Indian Economic Indicators Optimistic Outlook, and Improving

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

2009 2010 2011 2012 2013 2014 2015 2016 2017

Old Forecast

New Forecast

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

2009 2010 2011 2012 2013 2014 2015 2016 2017

Old Forecast

New Forecast



A Two-Track Global Economy EmergingSluggish Growth vs. Rapid Development

Advanced Countries

• Sluggish economic recovery

• High debt and fiscal deficits

• Low inflation or deflation

• Policy interest rates near zero

• Real currency depreciation

• Risk: stagnation

Emerging Markets

• Rapid economic growth

• Low, manageable debt levels

• Moderate or high inflation

• Rising interest rates

• Real currency appreciation

• Risk: overheating, asset bubbles



0%

5%

10%

15%

20%

25%

30%

35%

Big 4 Europe

Japan Korea

US Brazil Russia India China Other

1990

2000

2010

2020

Share Of Global Economic OutputFuture Will Be Different – New Global Powers Rising


Share

of G

lobal E

conom

ic O

utp

ut

Note: Big 4 – Germany, UK, France, Italy



$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

World Big 4 Europe

Japan Korea

US Brazil Russia India China Other

1990200020102020

Rising Wealth From Economic GrowthStrong Foundation For Vehicle Demand Widespread

Per

Capita G

DP

(in 0

00s, yr

2005 U

S$)

Source: IHS Data InsightsNote: Big 4 – Germany, UK, France, Italy

Over next 10 years income levels

in China and India will double



New Consumers: Income > $10,000Millions Of Potential Vehicle Buyers Coming To Market

0

50

100

150

200

250

300

350

Big 4 Europe

US Japan Korea

Brazil Russia India China

1990200020102020

Household

s W

ith $

10,0

00+

Incom

e

(in m

illio

ns, Y

R 2

005 $

US

)


Next Decade:

•China – 200 million more households will reach

in-market incomes

• India – In-market households will rise 133%

• Brazil/Russia - Add 44 million income qualifying

households, US/JK/E4 add only 22 million




-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

World

Incom

e <

5K

Incom

e >

5K

India

AS

EA

N

US

Bra

zil

Chin

a

E E

uro

pe

W E

uro

pe

S K

ore

a

C E

uro

pe

Ja

pan

Russia

Population Change: 2010-2020Vehicle Sales Also Impacted By Growth Rates

Change I

n T

ota

l P

opula

tion 2

010-2

020


Next Decade:

• Low income countries

grow 683 million people

• High income countries

add only 73 million people



New Drivers: Population Aged 15-64Demographics Leading To Millions Of Potential Vehicle Buyers

0

200

400

600

800

1000

1200

Big 4 Europe

Japan Korea

US Brazil Russia India China

1990200020102020

Popula

tion A

ged 1

5-6

4

(in m

illio

ns)


India has 800 million people of

driving age - another 130 million

added over next 10 years

US/JK/E4 will lose almost 400,000




0

100

200

300

400

500

600<

$1

,00

0

$1

<$

2

$2

<$

5

$5

<$

10

$1

0<

$2

0

$2

0<

$3

0

>$

30

• As country wealth increases,

vehicle demand increases.

• A graph of 50 countries

reveals a per capita

GDP/vehicle penetration

relationship.

• With significant economic

growth occurring in developing

nations, the implications for

the auto industry are huge.

Source: UN Statistical Yearbook

Lig

ht

Vehic

les in U

se

Per

1,0

00 P

eople

Per Capita GDP in US$1,000

Country Wealth and Vehicles in UsePersonal Transportation Desire And Need Is Universal



Vehicle PenetrationHuge Auto Industry Implications From Rise Of BRICs


Lig

ht

Vehic

les I

n U

se

Per

1000 P

eople

Per Capita GDP in Current US$

Long-run opportunities

0

100

200

300

400

500

600

700

800

900

$0 $10,000 $20,000 $30,000 $40,000 $50,000

Brazil

China

Germany

India

Japan

Russia S Korea

US

UK

When India reaches China’s

wealth level PARC will rise 200%

to 60+ million vehicles

When India reaches S Korea’s

wealth level vehicle need will

rise to 450 million vehicles

Wealth-Vehicle

Penetration Path






• Summary



Two Automotive WorldsLong Term Growth Only In Emerging Markets

Light Vehicle Sales

Note: Triad comprises USA, Japan & W. Europe

0

5

10

15

20

25

30

35

40

45

50

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Mil

lio

ns

Triad LV Sales BRICs LV Sales



Light Vehicle Sales Index2010 Ended on an Upswing for Emerging Markets

Lig

ht

Vehic

le S

ale

s (

Index Y

ear

2007=

1)

China

India

Brazil

JapanN America

EU

Trend

Monthly Sales SAAR


Financial Crisis



Region Share Of Global Light Vehicle SalesIndia Rising, But Still Relatively Small

0%

5%

10%

15%

20%

25%

30%

35%

40%

Japan/

S K

ore

a

Euro

pe

Nort

hA

merica

South

Am

erica

ME

A

South

Asia

India

Chin

a

2005

2011

2017

16

Share

of W

orld T

ota

l S

ale

s



India Light Vehicle Sales ForecastStrong Growth To Continue

0%

5%

10%

15%

20%

25%

30%

35%

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,0002002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Sales

Annual Change

17

Sales to hit 3 million

units this year

Growth expected to

moderate over

forecast horizon

Annual Lig

ht

Vehic

le S

ale

s (

units)

Annual C

hange (p

erc

ent)



India Sales Forecast By ManufacturerMaruti Suzuki Dominates Market – For Now

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Ma

ruti

Suzuki

Ta

ta

Mahin

dra

Mahin

dra

Hyundai

To

yo

ta

V W

G M

Fia

t

Ford

Honda

Oth

ers

2005

2011

2017

18

Global OEMs to increase

share in coming years

Share

of Tota

l L

ight

Vehic

le S

ale

s



India Sales Forecast By Platform SizeSmall Vehicles Dominate Market

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%A B C D E

Min

iF

F

Com

pact

FF

Full-

Siz

eF

F

2005

2011

2017

19

Higher incomes, maturing

market creating trend

towards larger vehicles

Share

of Tota

l Lig

ht

Vehic

le S

ale

s



India Light Vehicle Forecasted ProductionRising Demand For Small Vehicles Helping Industry

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,0002002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Exports

Production

20

Domestic production accounts for

99%+ of domestic sales

Potential for more A/B sized

vehicles to Europe and S America

Lig

ht

Vehic

le P

roduction (

units)






• Summary



Summary

India’s years of strong economic growth creating millions of automobile

consumers

Sales to reach 3.1 million units in 2011, up 19% over last year.

Capacity growth keeping pace with domestic market – not much room for

export growth

Inflation – food, oil – biggest threats to short-term outlook

automotive economics - umtri · huge auto industry implications from rise of brics source: ihs data...

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