Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Automobiles Sector Analysis Report 

[Key Points | Financial Year '19 | Prospects | Sector Do's and dont's]

2020 Special Report: 7 Stocks to Ride the Coming Rebirth of India Rally. Full Details Here...

  • The Indian automobile market can be divided into several segments viz., two-wheelers (motorcycles, geared and ungeared scooters and mopeds), three wheelers, commercial vehicles (light, medium and heavy), passenger cars, utility vehicles (UVs) and tractors.
  • India is currently the world's 5th largest manufacturer of cars, 7th largest manufacturer of commercial vehicles, and the largest manufacturer of two wheelers in the world. Indian automotive industry (including component manufacturing) is anticipated to reach Rs 16.2-18.2 trillion (US$ 251.4-282.8 billion) by 2026.
  • Overall, domestic automobile sales increase to 26.3 million vehicles in FY19 from 25 million in FY18. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector.
  • Indian automobile industry has received Foreign Direct Investment (FDI) worth US$ 21.4 billion between April 2000 and March 2019. In addition, several initiatives by the Government of India and the major automobile players in the Indian market are expected to make India a front-runner in the two-wheeler and four-wheeler market in the world by 2020.
  • Two-wheelers dominate the industry and make up 81% share in the domestic automobile sales in FY19. The Two Wheelers segment leads the market in terms of volume owing to a growing middle class and a young population.

How to Research the Automobile Sector (Key Points)

  • Supply
  • The Indian automobile market has some amount of excess capacity.
  • Demand
  • Rise in middle class income and young population may result in strong growth.
  • Barriers to entry
  • High capital costs, technology, distribution network, and availability of auto components.
  • Bargaining power of suppliers
  • Low, due to stiff competition.
  • Bargaining power of customers
  • Very high, due to availability of options.
  • Competition
  • High. Expected to increase even further.

top ↑

Financial Year '19

  • FY 2018-19 was a roller-coaster year for the two-wheeler industry. After a healthy first half, the second half turned into a rough ride on account of insurance price increase, liquidity crunch and agriculture sector slowdown.
  • Indian automotive industry saw marginal increase of 5% at 26,267,783 units in financial year 2018-2019, as per the data by Society of Indian Automobile Manufacturers (SIAM). The second half of last fiscal witnessed subdued growth across all segments. Overall Passenger Vehicle segment saw reported an increase of 2.7% in domestic sales for FY19 to 3,377,436 units as compared to 3,288,581 units in FY18.
  • Commercial vehicles saw the highest growth among all segments, an uptick of 17.5% to 1,007, 319 units. The segment grew despite the changes in axle norms, NBFC liquidity crunch and increased base effect.
  • Overall automobile exports reached 4.6 million vehicles in FY19, implying a CAGR of 8.1% between FY13-19. Automobile exports grew 14.5% in FY19.
  • In FY19, 7.6 lakh electric vehicles were sold in the country, dominated by two-wheelers at 16.4% and three-wheelers at 83% (PwC report).
  • During the year, ABS/CBS compliance was implemented with effect from April 1, 2019 and compliant variants were launched through the second half of the fiscal year.

top ↑

Prospects

  • The Indian government has set up an ambitious target of having only electric vehicles being sold in the country. The Indian auto industry is expected to grow in the range of 5-7% in FY19-20.
  • GDP growth estimate for FY2019-20 is 7.3%, supported by the continued recovery of investment and consumption. Monsoon is expected to be near normal and well distributed as per the forecast by India Meteorological Department (IMD). This would augur well for Indian agriculture, positively impacting rural sentiment.
  • FY2020-21 is expected to be a crucial year for automobile industry as only BS-VI emission norms compliant vehicles will be sold from April 2020. The exercise is likely to see companies show extra caution in dispatching cars to dealers in the next few months, which may cause a continuation of the decline in wholesale numbers. The price increase expected, could adversely impact the industry and we expect a relatively weaker FY2020-21.
  • The Union Cabinet has approved the proposal for implementation of second phase of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II) in India which could support up to 1 million two-wheelers.
  • The Government of India expects automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023. India will be part of "Global Automotive Triumvirate" - the global BIG 3 in coming 20 years and will also exceed the Indian automotive sales from US market by mid 2030s.

top ↑

Related Links for Automobile Sector
Quarterly Results | Sector Quote | Over The Years

Views on News

Sorry! There are no related views on news for this company/sector.

Most Popular

The Next Few Days Are Crucial for Smallcap Investors - And 3 Must-Buy Stocks (Profit Hunter)

Feb 19, 2020

While I have been writing about the rebound in smallcaps for quite some time now... I have shied from the question - When exactly is the smallcap rebound happening. Well, the answer is now.

This Smallcap Stock Could be the Next Titan (Up 1,400% in 10 Years) (Profit Hunter)

Feb 11, 2020

A blueprint to latch on to the next 'Crorepati' stock - and an event I hope you won't miss on any account.

Here's Why I Recommended 15 Stocks in One Day Flat Views On News (Views On News)

Feb 14, 2020

This proven strategy can give big returns in quick time.

Will Algo Traders Take Away All Your Profits? (Fast Profits Daily)

Feb 11, 2020

How to fight back against algo trading systems.

These Rebirth of India Stocks Are Raring to Compete with Tesla (The 5 Minute Wrapup)

Feb 17, 2020

There are Indian stocks which can soar like Tesla in the long-run.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get our special report, Secret to Increasing Your Trading Profits Today Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE AUTO


Feb 20, 2020 (Close)

COMPARE COMPANY

MARKET STATS