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Baxton

In: Business and Management

Submitted By nitintyg
Words 2363
Pages 10
Booz & Company

Delhi, 2011

India Automotive Market 2020

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

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 & Company
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India is booming – and projected to maintain the trajectory
Real GDP Growth

Regional: Percentage of World GDP

2005-2020
2004
India
2%

China
4%

US
28%

China

Japan
12%

Growth Rate (Base=2005)

Other
20%

4.0

EU
34%

2050 Estimate
Other
10%

US
26%

India
17%

3.5

India
3.0

2.5

2.0

1.5

China
28%

Thailand

United Kingdom
Germany

EU
15%

20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20

1.0
Japan
4%

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

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Emerging markets are transforming the economic landscape — could the future repeat the past ?
Percentage Contribution to World Economy

Percent Contribution of India & China,
US, Western Europe and UK to World Economy
(1500–2050 AD)

80%
80%

60%
60%
India & China

India & China

40%
40%

20%
20%

Western Europe
(excluding UK)

US

Western Europe
(excluding UK)

UK

0%
1500
1800

UK

1850
1850

1900
1900

1950
1950

2000
2000

2050

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

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

GDP Per Capita Growth

$3,000

$90,000

$3,000

$2,500

FDI Trends – India and China

$2,500

$80,000
$70,000
$60,000

$1,500

In $ Mn

$2,000

In $

In $ Bn

$2,000

$1,500

$1,000

$1,000

$500

$50,000
$40,000

$500

$30,000
$20,000
$10,000

$0

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

Years Since Liberalization

$0
1 3 5 7 9 11 13 15 17 19 21 23 25 27

Years Since Liberalization
China – 1979

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

Years Since Liberalization

India – 1991

Source: Economic Intelligence Unit, Booz & Company analysis
Booz & Company
DATE

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

Real GDP Growth

2005 Constant Prices ($Trillion)

(Base = 2005)
Growth relative to 2005

$ Trillion
25

China

China

11

India

10
9

20
15

8
7
6

10

5

India
Japan
5

Germany
Russia
Pakistan

0
2000

2010

2020

2030

2040

4

Pakistan

3

Russia

2

Germany

1

Japan

0
2000

2010

2020

2030

2040

Source: Global Insight Database, Booz & Company analysis
Booz & Company
DATE

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Wealth is being generated via a positive structural shift in the economy Shift in GDP composition by sector
(1950 to 2020E)
100%
90%
30%
80%

35%

39%

% contribution to GDP

48%

49%

50%

40%

42%

15%

11%

8%

2007

2012

2020

70%
60%

14%

50%

36%
38%

40%
30%

37%
56%

20%
29%

22%

10%
0%
1950

1990

2000

Agriculture

Industry

Services

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

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

Private Consumption Growth

1994-2015

Base - 1994
Index
100%

15

Transport / Comm.

14

29%

Food & Beverages

% consumption of total

40%

12
11

55%
8%
7%

6%
15%

13

16%

Clothing & Footwear

Recreation

10
9

13%
4%

Housing
Health

8

Total Consumption

7
6

5%

23%

Transport / Comm.

5
4

3%

20%

5%

Recreation / Education

19%

Miscellaneous

11%

3%
6%
1994

3%

3
2

9%
2005

Food & Beverages

1
0
1990

2015

1995

2000

2005

2010

2015

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

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This rise in per capita GDP will lead to higher vehicle ownership
Cars / 1000 People Versus GDP / Capita
1990 - 2013

Cars / 1000 People
600

Germany

550
500

USA

450
Saturated penetration levels in developed economies

400
350
300

Russia

250
200
Rising per capita income leading to increased penetration; trend expected to continue given low current levels

150
100

India
China

50
0
$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
Source: Economist Intelligence Unit; Booz & Company analysis
Booz & Company
DATE

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The result: India is an anchor of future growth in the auto industry
GDP Growth by Country
2010 – 2020

> 5% projected GDP growth
3.5 % - 5% projected GDP growth
< 3.5% projected GDP growth
Source: Global Insight Database, Booz & Company analysis
Booz & Company
DATE

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Automotive sales are destined to resonate with global economic shift - India is the place to be for the global OEMs
Automotive Sales by Geography
(Passenger Vehicles, Commercial Vehicles and Two Wheelers)

2009

1980
Market size: 60 M units
Asia & Japan: 7%
Europe: 42%
NA: 41%

Market size: 102 M units
Asia & Japan: 45%
Europe: 32%
NA: 18%

2020

Market size: 205 M units
Asia & Japan: 65%
Europe: 20%
NA: 15%

Shift in center of gravity

1)
Source:

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

Booz & Company
DATE

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India’s car market has the potential to grow up to 6+ millions units annually by 2020
Passenger vehicle sales in India
(2001 – 2020)
Million Units
6.5
Aggressive

6.0
5.5
5.0

Base Case

4.5

Consensus

4.0

Conservative

3.5

Germany Car Sales 2008 - 3.1 M Units

3.0
2.5
2.0
1.5

Italy Car Sales 2008 - 1.9 M Units
Spain Car Sales 2008 - 1.6 M Units

1.0
0.5
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Note:
Note:

Figures for passenger vehicles includes numbers for light commercial vehicles like TATA Ace, TATA Magik, Suzuki Omnivan, Toyota Dyna, Mitsubishi Canter, etc
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 market
Conservative 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
Booz & Company
DATE

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India will soon be bigger than most other markets
Western Europe (1998) and India (1998)
4,500
3920

4,000

Sales Volume
(in thousands of units)

3,500
3,000
2,534 2,488

2,500

2,289

2,000
1,446

1,500
1,000

640

538

530

369

500

320

316

280

196

192

174

147

141

IR
EL
AN
D
NO
RW
AY
FI
N
LA
ND

AU
ST
SW
RI
A
IT
ZE
R
LA
N
D
SW
ED
EN
G
R
EE
CE
DE
NM
AR
K

G
AL

PO
RT
U

IN
DI
A

SP
NE
AI
N
TH
ER
LA
N
DS
BE
LG
IU
M

E
FR
AN
C

G
DO
M

KI
N

IT
AL
Y
IT
ED
UN

G
ER
M

AN
Y

0

Source: Global Insight Database, Booz & Company analysis
Booz & Company
DATE

India Auto Market.ppt

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India will soon be bigger than most other markets
Western Europe (2009) and India (2009)
4,500
4,035
4,000

Sales Volume
(in thousands of units)

3,500
3,000

2,678
2,360 2,262
2,216

2,500
2,000
1,500

1,071
1,000
581

451

500

349

294

247

236

203

131

126

102

64

IR
EL
AN
D

ND
NL
A
FI

RW
AY
NO

AU
ST
S
R
W
IA
IT
ZE
R
LA
N
D
SW
ED
EN
G
R
EE
CE
PO
RT
U
G
AL
DE
NM
AR
K

DS
RL
AN

N

M
NE

TH
E

BE
LG
IU

SP
AI

G
DO
M

UN

IT
ED

KI
N

IN
DI
A

IT
AL
Y

E
FR
AN
C

G
ER
M

A

NY

0

Source: Global Insight Database, Booz & Company analysis
Booz & Company
DATE

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Much earlier than 2020, India will exceed the major EU markets
Western Europe (2015) and India (2015)
5,500

5,070

3,693
3,500
2,598 2,566
2,500

2,434
1,624

1,500
608
245

203

171

160

151

NL
AN
D
IR
EL
AN
D

299

N
HE
RL
AN
D
S
BE
LG
IU
M
SW
ED
EN
AU
ST
SW
RI
A
IT
ZE
R
LA
N
D
PO
RT
U
G
AL
G
R
EE
CE
DE
NM
AR
K

SP
AI

IT
AL
Y

E

323

NE
T

KI
N

FR
AN
C

G
DO
M

NY
A
UN

IT
ED

G
ER
M

IN
DI
A

-500

341

FI

342

500

RW
AY

617

NO

Sales Volume
(in thousands of units)

4,500

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

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India and China dwarf existing automotive markets such as
Germany or UK
Automotive sales volume by country
2030

Number of unit sales

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

> 10 M
3 M - 10 M
1M-3M
$75K

Source: Global Insight 2009, Booz & Company Analysis
Booz & Company
DATE

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The market of tomorrow will reflect increased prosperity of the nation Indian household income & car sales distribution
2030
% of total car sales

% of households 60%

40%

Household income distribution
Distribution of car sales by segment

50%

30%
40%
33%
30%

20%

20%

20%

10%

12%

11%

12%
10%

5%
2%
0%

Car Segments
Income
distribution

A
< $1K

B
$1K - $3K

$3K - $5K

C

D

$5K - $10K

$10K - $15K

5%

0%

E&F
$15K - $25K

0%

MPV

SUV

$25K - $35K

PUP
$35K - $50K

Other
$50K - $75K

> $75K

Source: Global Insight 2009, Booz & Company Analysis
Booz & Company
DATE

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Interestingly, India’s market is expected to overtake the US auto sales by ~2035
Light Vehicle Sales Projections - US, China, India
2004-2040, Thousand Units

Thousand Units
60,000

CHINA

55,000
50,000
45,000
40,000
35,000
30,000
25,000

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

Chinese automotive sales exceeds U.S

INDIA

20,000

UNITED STATES
15,000
10,000
5,000
0
2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

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

India Auto Market.ppt

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For more information please contact:

Chicago
Vikas Sehgal
Partner
+1-312-578-4828 vikas.sehgal@booz.com Booz & Company
DATE

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The most recent list of our offices and affiliates, with addresses and telephone numbers, can be found on our website, booz.com Worldwide
Offices
Asia
Beijing
Delhi
Hong Kong
Mumbai
Seoul
Shanghai
Taipei
Tokyo
Australia,
New Zealand &
Southeast Asia
Adelaide
Auckland
Bangkok
Brisbane
Canberra
Jakarta
Kuala Lumpur
Melbourne
Sydney

Europe
Amsterdam
Berlin
Copenhagen
Dublin
Düsseldorf
Frankfurt
Helsinki
Istanbul
London
Madrid
Milan
Moscow
Munich
Oslo
Paris
Rome
Stockholm
Stuttgart
Vienna
Warsaw
Zurich

North America
Atlanta
Chicago
Cleveland
Dallas
DC
Detroit
Florham Park
Houston
Los Angeles
Mexico City
New York City
Parsippany
San Francisco
South America
Buenos Aires
Rio de Janeiro
Santiago
São Paulo

Middle East
Abu Dhabi
Beirut
Cairo
Doha
Dubai
Riyadh

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
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Printed in USA
©2011 Booz & Company Inc.

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