a 12 commercial vehicles

8/12/2019 A 12 Commercial Vehicles

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COMMERCIAL

VEHICLESGROUP 12

ABSTRACTAn Analysis on commercial vehicles industry in India to

equip the reader with a detailed overview of the indus


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GROUP 12 1

ContentsExecutive Summary ....................................................................................................................................... 2

Overview of the Industry .............................................................................................................................. 3

Growth over the years .............................................................................................................................. 3

Strong Correlation with GDP ..................................................................................................................... 3Impact of Budget 2012-13 on Commercial Vehicles:.................................................................................... 5

Contribution to GDP : ................................................................................................................................ 5

Recent Mergers and Acquisitions In The Industry ........................................................................................ 6

Mahindra ................................................................................................................................................... 6

Implications ........................................................................................................................................... 6

Tata motors ............................................................................................................................................... 6

Why it acquired JLR? ............................................................................................................................. 6

Tata motors acquired 79% stake in Hispano Carrocera in 2009. .......................................................... 6

Ashok Leyland ........................................................................................................................................... 7

Penske ....................................................................................................................................................... 7

Ford ........................................................................................................................................................... 7

Analysts View of Companies/Industry .......................................................................................................... 7

Government regulations ........................................................................................................................... 8

Emission norms ..................................................................................................................................... 9

Age norms ............................................................................................................................................. 9

Weight norms ....................................................................................................................................... 9

Road Safety norms .............................................................................................................................. 10

Policy changes related to the industry, specially the impact of economic reforms ............................... 10

Driver of Growth ......................................................................................................................................... 11

The Hub and Spoke Model adoption ...................................................................................................... 11

Other structural factors that will push hub and spoke adoption ....................................................... 12

Main Players and Market Shares ................................................................................................................ 12

Key Personnel ......................................................................................................................................... 14

Tata Motors Ltd....................................................................................................................................... 14

Key developments ............................................................................................................................... 15

Ashok Leyland ......................................................................................................................................... 15


Eicher Motors Ltd .................................................................................................................................... 16


Mahindra & Mahindra ............................................................................................................................ 16


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GROUP 12 2

Innovations ................................................................................................................................................. 17

Use of CNG, India .................................................................................................................................... 17

FDI ............................................................................................................................................................... 17

Overseas Opportunities for Indian Manufacturers ................................................................................. 17

Exports 17Imports ................................................................................................................................................ 19

Competition from Foreign Firms ......................................................................................................... 20

References .................................................................................................................................................. 21

Executive Summary

The Commercial Vehicles Industry continues to bear the brunt of its cyclical nature because of

the pessimistic macroeconomic environment prevailing in and around India. After experiencing

a growth of 30% during the financial years of 2009-10 & 2010-11, the commercial vehicles

industry is again experiencing difficult times.[1] In 2011-12 the growth declined and came down

to 18.2%. If this wasnt a sign of slowdown, the industry slumped and the growth plummeted to

negative territory accentuating the effects of weak macroeconomic environment & once again


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GROUP 12 3

substantiating its cyclical nature. The new commercial vehicles sales contracted by 2% in 2011-

12 .[2]

Structure of this industry is very oligopolistic in nature. The domestic CV industry is relatively

concentrated with the top three players accounting for 88 per cent (in volume terms) as of

2011-12. [3] The player which has dominated the CV industry so far is Tata Motors with more

than half of the market share, which is followed by Mahindra & Mahindra with 18% and afterthat comes Ashok Leyland with a market share of around 10% which is very small compared to

Tata Motors.[3] Technological Developments have led upgraded vehicles and increased

competition with a number of foreign players forming joint venture with Indian companies. This

Industry is vital to the growth of any country and is driven by it. The data of a number of

countries displays a strong correlation between growth and commercial vehicles sales. The

demand of commercial vehicles is very volatile when you look over the past decade.

A majority of end users of commercial vehicles still come from unorganized sector and the

competition in the industry is moderate due to a smaller number of players dominating a huge

portion of market share.

Overview of the Industry

Growth over the years

Commercial Vehicles Industry has grown consistently with a few exceptions over the past 12

years with a CAGR of 20%.[5] We have shown the growth in this table below, but it has not

been adjusted to inflation. However it still provides a good enough picture to gauge the growth

of the industry.

Strong Correlation with GDP

The periods in which industry experienced slumps were 2008-09 & 2012-13. However, these

years were just the amplification of GDP fluctuations which tells us that this is a cyclical

industry. Also, the two graphs below can be compared and you will find that CV sales are just

amplification of GDP fluctuations.


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GROUP 12 4

Source : World Bank, facilitated by Google Interface :https://www.google.co.in/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_kd_zg&hl=en&dl=en&idim=country:I

ND:USA:PAK#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_kd_zg&scale_y=lin&ind_y=false&rdim=region&idim

=country:IND&ifdim=region&tstart=1000146600000&tend=1347301800000&hl=en_US&dl=en&ind=false

Source : Crisilhttps://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=ECONOMY#storyId#17848#sectionId#3177#newsFeedId#undefined
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Impact of Budget 2012-13 on Commercial Vehicles:

There were a lot of changes for automotive industry in this budget. However, commercial

vehicles were left largely untouched expect a setback of excise duty change. Previously dutywas paid on a per chassis basis which was Rs 10,000. Now, it has been changed to an ad-

valorem rate of 3%. In the already depressed macro-economic environment, this is a setback to

the industry and the government should have refrained from doing so, considering the fact that

this is a growth driving industry for the country. [4]

Contribution to GDP :

The industry plays a crucial role to the economic growth of the country. As an economy grows,

people spend more, demand more, travel more and consume more. For fulfilling all these

needs you need commercial vehicles. The industry transports more than half of the goods to

address freight transportation and the Indian economys GDP growth has a correlation of 0.95

with the freight movement over a period of 1970-71 to 2011-12.

Although commercial vehicles account for around 1% of GDP, the role they play towards a

countrys economy is very crucial.

Commercial vehicles: Aggregate demand supply trend (Annual)

Year Production Domestic sales Exports Growth (Overall )

2001-02 162,371 146,469 11,870

2002-03 202,852 191,069 10,707 20%

2003-04 275,098 260,256 17,283 26%

2004-05 350,202 318,599 29,975 21%

2005-06 387,661 351,042 40,567 10%

2006-07 495,469 468,178 49,734 22%

2007-08 548,823 490,161 59,016 10%

2008-09 416,970 384,952 42,625 -32%

2009-10 565,004 532,279 44,764 26%

2010-11 759,572 683,762 73,966 26%

2011-12 929,136 809,499 92,258 18%

2012-13 831,961 793,155 80,047 -12%

2012-13(Apr-Jul) 264,947 248,225 29,539

2013-14 (Apr-Jul) 252,515 223,634 21,702

Note

1) In certain years production is greater than total sales on account of production

of certain models of Tata motors not being reported

2) Commercial vehicle includes goods vehicles and passenger vehicles and

excludes three wheelers

Source: SIAM, CRISIL Research


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Recent Mergers and Acquisitions In The Industry

Mahindra

Acquired a 70% stake in SsangYong, the South Korean Auto maker for US $463

million in Feb 2011.

Mahindra & Mahindra: Indian Multinational automobile manufacturer headquartered inMumbai, India. It is one of the largest vehicle manufacturers by production in Republic of India.i

SsangYong:It is the 4th

largest South Korea based automobile manufacturer.ii

Implications

Will result in formation of a competitive global UV player.

SsangYong has strong technological capability

Mahindra & Mahindra will provide strong marketing strategies.

This acquisition will further strengthen the position of Mahindra & Mahindra in

the UV market.

They have also signed a tripartite agreement with the labour unions which has

provisions for employee protection, commitment to labour, etc.

Tata motors

Acquired Jaguar and Land Rover in 2008 from the US based Ford Motors for US

$2.3 billion.iii

Deal included purchase of JLRs manufacturing plants, 2 advanced design centres in UK, national

sales company spanning across the world and also the licenses of all intellectual properties.

Why it acquired JLR?

To reduce dependence on Indian Market which accounted for 90% of sales.

It expanded its range of offering: it owned the cheapest car NANO on one handand luxury cars like JLR on other.

It got access to design technology of the acquired company. This will help it to

improve its core products in India.

Provided instant recognition and credibility across the globe.

The cost advantage as Corus was supplying steel to these giants so this would

have provided synergy to the group on the whole.

Was it really worth?

Morgan Stanley reported that the acquisition was negative for Tata Motors as it

had increased earnings volatility. Tata Motors had to incur huge capital expenditures as it planned to invest

another US $1 billion in JLR.

Tata motors acquired 79% stake in Hispano Carrocera in 2009.iv


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Tata Hispano Motors Carrocera is based in Spain and is one of the largest

manufacturers of bus and coach cabin in Europe. In 2005 Tata motors had

already purchased a 21% stake in the company.

Reasons for acquisition

It will help Tata Motors to strengthen its operational efficiencies such as productivity, costreduction and development of new products to increase market share and enhance brand

value.

Ashok Leyland

Acquired European major Avia in 2006.

Ashok Leyland, the Indian flagship of Hinduja group acquired the Avia truck

business unit, a leading vehicle manufacturer in Europe at around $35m.

It will be the first Indian company to have a truck manufacturing unit in Europe.

After the acquisition there was increase in the production capacity as well.

Penske

To Acquire commercial vehicle distributer in Australia for $200m

The group which owns one of the largest truck distributers in North America is

set to buy Western Star Trucks Australia from Transpacific Industries Group for

$200m in third quarter of 2013.

This transaction will help generate revenue to 4460m

The company has customers in industries including logistics, construction,

manufacturing, agriculture etc.

Ford

Acquired Volvo car operations in 1999.v Ford acquired Volvo car operation for $6.45 billion in 1999.

Ford intensified competition in the luxury car market and also increased its

production capacity, distribution network etc.

The purchase of a Swedish company by a US based one will hit car and truck

workers in Britain. The sale to Ford will enable Volvo to concentrate on building

trucks and buses of which it is a major player.

Analysts View of Companies/Industry

Industry in a cyclical phaseAfter showing 30% growth in 2009-2010 the industry has shown a considerable decline

or has remained stagnant due to economic downturn.

Segment wise there is difference in the growth. For the LCV there is a sustained growth

of 14.5% YoY while the M&HCV bore the brunt of slow economic growth and weak

investment sentiments.

Reasons for sharp decline in demand for M&HCV


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Contraction of demand in the higher tonnage category of trucks, tippers, tractors, etc.

causing the volume to shrink by 22.8% YoY.

OEMs have been able to gain market share

This has been possible due to expanding dealership networks and wider model

offerings.

Volvo Eicher JV gained market share due to increasing acceptability in heavy duty trucksegment, while Mahindra also performed better than industry. Ashok Leyland has

expanded the market coverage outside southern India.

New Product Offerings

DOST- a joint venture between Ashok Leyland and Nissan in the LCV segment

Greenfield facility to be set up soon by the JV to build upon its 7-8% market share.

Strong demand for LCV segment

Demand has specifically been driven by Small Commercial Vehicles in non-urban market

due to improving road network, better connectivity in tier III/IV cities.

With modest investments, such vehicles offer promising payback and also attractive

employment opportunities to the First Time Users (FTU).

Exhibit 1: Trend in Domestic Commercial Vehicle VolumesSegment-wise

Light CVs Medium & Heavy

CVs

Total

2007-08 215,912 274,582 490,494

2008-09 200,699 183,495 384,194

2009-10 287,777 244,944 532,721

2010-11 361,846 323,059 684,905

2011-12 460,831 348,701 809,532

2012-13 522,582 270,941 793,523

SOURCE: SIAM, ICRA Estimates

Government regulations

At all stages of manufacturing, commercial vehicles companies have to conform to

environmental imperatives, safety requirements and government policies,etc. Major

regulations that are applicable include: emission norms (as stipulated under the Auto Fuel

Policy introduced in 2003), age & weight norms, safety measures and fiscal regulations.


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Emission norms

Emission norms are specific limits set to reduce pollutants released into the

environment by vehicles

Idle emission limits (to control emissions by vehicles largely idling while operating) were

the first emission regulations introduced in India in 1989

Post 2000, India began adopting the European emission and fuel regulations (Euronorms) for four-wheeled light-duty and heavy-duty vehicles with some minor changes

o Auto fuel policy

o The Auto Fuel Policy marked out 11 metros, namely, Delhi (NCR), Kolkata,

Mumbai, Chennai Hyderabad, Ahmedabad, Surat, Pune, Bangalore, Kanpur, and

Agra for stricter standards due to high levels of air pollution in these cities.

o With effect from April 1, 2010, BS-IV complaint fuels were made available in 13

major cities (Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad,

Ahmedabad, Pune, Surat, Solapur, Lucknow, Kanpur and Agra) and by September

23, 2010 BS-III complaint fuels were made available in the rest of the country.

Age norms

As per the Central Motor Vehicles (Third Amendment) Rules, 2002, no national permit

will be granted to a multi-axle goods carriage, which is more than 15 years old.

However, there is no such restriction on plying such vehicles within the country (except

in New Delhi, Chennai, Kolkata and Bangalore)

The Delhi government barred all commercial vehicles (since 2001) older than 8 years

from plying in the city. However, older vehicles will be permitted to ply within the state,

if they run on CNG or LPG

In Maharashtra, similarly, the Mumbai High Court banned the entry of vehicles older

than 8 years within the city limits, with effect from February 01, 2004.

In Kolkata, the High Court entry of banned the entry heavy vehicles older than 15 years,with effect from July 25, 2009.

Weight norms

The Motor Vehicle Act empowers the Union Ministry of Surface Transport to specify the

gross vehicle weight and maximum safe vehicle weight for all transport vehicles


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Road Safety norms

Current traffic conditions, driving habits and traffic density necessitate that maximum

safety norms are built into vehicles.

In 2011, the Society of Indian Automobile Manufacturers (SIAM), through its

initiative: Society for Automotive Fitness & Environment (SAFE) launched road

safety awareness programmes, in co-ordination with various state

government departmentsSource :

https://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=null#storyId#18730#sec

tionId#3185#newsFeedId#undefined

Policy changes related to the industry, specially the impact of economic reforms

New Road transportation Policy in the budget FY 2010-2011 devoted heavy investments

in the infrastructure sector.

Encouragement by government to the Public-Private sector partnerships in areas like

bus transportation which has always been heavily disorganised dominated by small

scale participants with inadequate resources catering to huge demand. Boost to public transportation system leading to increased sales of commercial vehicles

Provision of GST or single tax system across the states will lead to efficient movement of

goods and efficient supply chain services.

Increased sales of vehicles that are green and fuel efficient due to government subsidies

Source:http://articles.economictimes.indiatimes.com/2012-09-26/news/34102028_1_bus-

segment-fuel-efficiency-vehicle-owners
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GROUP 12 11

Driver of Growth

The Hub and Spoke Model adoption

The hub and spoke model is a system which makes transportation much more efficient

by greatly simplifying a network of routes. It is extensively used in commercial aviation for bothpassengers and freight, and the model has also been adopted in the technology sector as well.

Delta Airlines pioneered the method in 1955, but it wasn't until the 1970s, when the FedEx

company took advantage of the concept, that it got into popular mode [6]

The design of a hub and spoke model is highly efficient for a myriad of reasons. By

centralizing control, the company can afford a smaller staff which concentrates on

management from a central location. In the case of freight, all packages can be sorted at the

hub, rather than sorted in multiple locations. This makes the freight company much more

efficient, and reduces the risk of error. [6]

Source: CRISIL Research

It is increasingly being adopted by the domestic road freight transporters. These

transporters are expanding into integrated logistics, with larger fleets, and to reduce cost, theyare venturing out into . Their market share in the industry is estimated to have increased from 2

per cent in 1993-94 to 11 per cent in 2008-09 and is set to increase further in the coming years,

as the industry consolidates. [7]

Riding on hub and spoke trend; CV makers to launch more HCV and SCV models [7]


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GROUP 12 12

Other structural factors that will push hub and spoke adoption

Expansion of highways

o Currently, national highways constitute only about 2 per cent of the total road

network in India, but carry about 40 per cent of the total traffic.

o On the other hand, state roads and the major district roads account for 18 per

cent of the road length, but carry only 40 per cent of the balance traffico During 2011-12 to 2015-16, CRISIL Research expects an average of 14.7 km of

national highways to be constructed /upgraded per day, at an estimated cost of

Rs 2,535 billion

o Consumption of consumer products in rural areas is set to rise aided by a

widening hub and spoke network and better roads [7]

Emergence of GST

o The government proposes to implement a centralised goods and services tax

(GST) to replace the existing tax regime (excise, service tax and VAT).

o Under the current tax structure, the Centre levies a uniform tax (CST) on

interstate sales besides the local value added tax paid to the state governmentso To avoid interstate CST, companies are forced to maintain at least one

warehouse in each state.

o Introduction of the GST, however, would allow companies to aggregate state-

based warehouses into one large, regional warehouse that offers cost and

operational efficiencies in geographically large markets.

o As a result, the use of HCVs for hub-to-hub transportation will increase to service

these large warehouses, which function as centralised hubs

Growth in organised retail

o By 2014-15, Pantaloon plans to add about 15 million sq ft of retail space

o As retail chains expand their reach and compete for quicker delivery of goods to

consumers, they will outsource their logistics needs to large transporters usingthe hub and spoke model

Main Players and Market SharesThe domestic CV industry is relatively concentrated with the top three players accounting for 88

per cent (in volume terms) as of 2011-12. Tata Motors continues to dominate the CV industry

with nearly 60 per cent share, followed by Mahindra & Mahindra (M&M) with 18 per cent, and

Ashok Leyland with 10 per cent.

On the basis of usage, the industry can be broadly divided into two product segments, namely,

goods vehicles (trucks) and passenger vehicles (buses). These can be further segmented on thebasis of gross vehicle weight into light commercial vehicles (LCV) and medium and heavy

commercial vehicles (MHCV).


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GROUP 12 13

Source: Crisilhttp://crisil.com/research/industry-toc-commercial-vehicles.html
http://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.html


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GROUP 12 14

Key Personnel

ChairmanManaging

DirectorCEO CFO

Tata Motors Cyrus P. Mistry Karl J. SlymRavindra

PisharodyC.Ramakrishnan

Ashok

LeylandDheeraj Hinduja

Vinod K.

Dasari

Gopal

Mahadevan

Eicher

Motors LtdS. Sandilya Siddhartha Lal Siddhartha Lal Lalit Malik

Mahindra &

Mahindra

Keshub

Mahindra

Anand

MahindraBharat Doshi

Tata Motors LtdTata Motors Ltd (TML) is the market frontrunner of the CV industry in India dominating the LCV

as well as MHCV segments. In 2005, TML created a new segment by launching Tata Ace, India'sfirst indigenously developed mini-truck. TML's cars, buses and trucks are marketed in several

countries in Europe, Africa, the Middle East, South Asia, Southeast Asia and South America. The

company has had several international ventures. Some of which include:

Tata Daewoo Commercial Vehicle Co Ltd in South Korea

Hispano Carrocera, a Spanish bus and coach manufacturing company, in which TML has

a 21 per cent stake

JV with Marcopolo, a Brazilian manufacturer of bus and coach bodies

JV with Thonburi Automotive Assembly Plant Co of Thailand to manufacture and market

pick-up vehicles in Thailand.

TML has research centres in India, the UK, and in its subsidiary and associate companies

in South Korea and Spain.

Financial Performance

Source: Crisilhttp://crisil.com/research/industry-toc-commercial-vehicles.html
http://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.html


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GROUP 12 15

Key developments

TML is scheduling to scale up its LCV capacity, including that of its largest selling LCV,

Ace mini-truck. The expansion is part of its capital expenditure plan to spend around Rs

3 billion a year on expansion and up gradation until 2014. The company accomplished

capacity expansion at its Pantnagar facility by 100,000 units to 350,000 units a year in

the last quarter of 2011-12. It entered the super-luxury bus market with the 37-45 seater Divo, priced at Rs 6.6-9.0

million. The company is also planning to launch a multi-axle super luxury coach by 2013-

14.

It launched new variants of Tata Starbus Ultra in the mini- and mid-bus segments. The

buses are priced in the Rs 1.5-2.2 million range and will be available in 22-46 seating

configurations.

Ashok Leyland

Ashok Leyland Ltd (ALL) is the second-largest CV manufacturer in India. The company is presentmainly in the MHCV segment, manufacturing heavy trucks and buses. ALL formed a JV with

Nissan in 2007 to manufacture LCVs.

Source: Crisil

http://crisil.com/research/industry-toc-commercial-vehicles.html

Key developments

ALL has earmarked about Rs 41.50 billion in investments in its various facilities in Tamil

Nadu. This includes a Rs 16 billion investment by the ALL-Nissan JV to set up

a greenfield facility at Pillaipakkam. The company will also invest in Hosur, Ennore

and later at Velli Vaayalsavadi and Orgadam to expand its MHCV capacity.
http://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.htmlhttp://crisil.com/research/industry-toc-commercial-vehicles.html


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GROUP 12 17

and Engine Corporation (ITEC) formed a 51:49 JV, Mahindra International Ltd, in 2005. The JV is

into manufacturing trucks and buses in India for domestic as well as export markets, providing

engineering services for the design and development of trucks and buses for ITEC globally and

empowering ITEC to source a large portion of its components and materials from India.

M&M entered into a 51:49 JV with Navistar Inc USA. The JV company, Mahindra Navistar

(MNAL), manufactures CVs ranging from 3.5-49.0 tonnes.

InnovationsThere are several technological innovations that were brought about but perhaps the most

visible of them in India is the introduction of buses that run on CNG.

Use of CNG, India

Supreme court order of 1998[16] forced the Delhi government to ensure commercial

vehicles running in the city to use CNG by 2002

In 2008, 3500 buses, 1200 taxi, 65000 three wheelers and 5000 mini buses were fuelled

by CNG on Delhis roads

FDI

Approvals for FDI in Indian Automobile Market have become automatic and the country can

export without paying taxes. Hence, a big opportunity for automobile FDI growth exists in India.

Big names like Ford Motor Company, General Motors, GE Corporation, Nissan-Renault,

DiamlerChrysler, VW Group, Honda Motors, and Toyota Motors have set up their

manufacturing units in India. [A-1]

FDI has been considered as a major catalyst in promoting sustainable development in

developing countries. FDI has the potential to transfer skills and technology, enhance

exports,generate employment, raise productivity, increase incomes and contributes to the

long-term economic development of the worlds developing countries.

Overseas Opportunities for Indian Manufacturers

1) Increasing exports of Made In India vehicles

2) Establishing manufacturing facilities at foreign locations (e.g. TVS Indonesia)

3) Contract Manufacturing (e.g. Sub-150cc Bajaj motor cycles for Kawasaki)

4) Growth through Mergers & Acquisitions

(TATA Motors acquisition of Daewoo Commercial Veh, Korea & Spanish bus maker- Hispano)

ExportsExports of commercial vehicles do not a occupy significant share (mere 3.18% in 2011-12) in

terms of numbers of total automobile exports as evidenced by chart below. In fact they are in

the lowest rung, with 2-wheelers being leaders. :


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GROUP 12 19

Sources: (for both above) Crisil Research;

https://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=null#storyId#10836#sec

tionId#3191#newsFeedId#undefined

ImportsWith export promotion on one hand, imports are strictly regulated on other hand. In fact, Exim

(Export-import) policy of India is quite strict in matters related to import of vehicle. Apart from

the heavy custom duty on the automobile, the Exim policy of India also states that the Vehicle

should not be manufactured/ assembled in India, not been sold, leased or loaned prior to being

imported to India; or should have been registered for use in any country prior to being

imported to India. It is also mentioned in the Exim policy that for new vehicles being imported


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into the country should be imported only from the country of manufacture and should comply

with Central Motor Vehicles Rules (CMVR), 1989.

The import norms that are particularly applicable to commercial vehicles are: [A-2]

Import of passenger cars / jeeps / multi utility vehicles:

The conditions mentioned for import of new and used motor vehicles is not applicable for the

import of passenger cars/jeeps/multi-utility vehicles etc and all these vehicles may be imported

in India after the payment of full custom duty and fulfilling the following requirements.

1) Individuals coming to India for permanent settlement after two years' continuous stay

abroad provided the car has been in possession of the individual for a period of minimum one

year abroad.

2) Resident Indians presented with a car as an award in any international event / match /

competition.

3) Legal heirs/successors of deceased relatives residing abroad;4) Physically handicapped persons;

5) Companies incorporated in India having foreign equity participation;

6) Branches/offices of foreign firms;

7) Charitable/Missionary/Religious institutions registered as per the law relating to the

registration of the societies or trusts or otherwise approved by the Central or State

Government.

8) Honorary Consuls of foreign countries on the recommendations of the Ministry of External

Affairs, Government of India.

9) Journalists/Correspondents of foreign news agencies having accreditation certificate with the

Press Information Bureau, Ministry of Information and Broadcasting, Govt. of India.

The DGFT (Directorate General of Foreign Trade) may, however, permit relaxation of these

conditions or imports by any other category not listed in this Public Notice in special

circumstances.

Competition from Foreign Firms

So far Indian manufacturers have managed to stay in top in this segment of vehicles. But a

couple of them at lower levels are facing the heat due to foreign competitors. For instance,

Ashok Leylands share in medium and heavy commercial vehicles dropped to 20.2% in the last

fiscal from 22.2% in 2010-11 while Tata Motors share remained stable at 62.3%.[A-3]

The implications of this are gradual erosion of share are bound to happen as there is intense

competition from new entrants and stagnant demand for its products in a slowing economy.The worlds largest truck maker, Daimler AG, expects to roll out its trucks in India in September

from a plant in Oragadam near Chennai that has a capacity to manufacture 36,000 units a year.

US-based Navistar International Corp. launched its vehicles in India in 2010 in a joint venture

with Mahindra and Mahindra Ltd.Others in the fray are Germany-based Man Se and two

Swedish companies, Volvo Trucks and Scania AB.


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References1. ICRA Research Serviceshttp://www.icra.in/Files/ticker/SH-2013-Q2-1-ICRA-Commercial%20Vehicles.pdf

2. ICRA Research Serviceshttp://www.icra.in/Files/ticker/SH-2013-Q2-1-ICRA-Commercial%20Vehicles.pdf

3.

CRISIL Research, Structure of the Industry

https://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=ECONOMY#storyId#17847#sectio

nId#3176#newsFeedId#undefined

4.

D&B, Special Release, Union Budget 2012-13, Impact Analysis

http://contents.dnb.co.in/Special_Reports/Union_Budget_analysis_2012_13.pdf

5. Crisil Research, Commercial Vehicles

https://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=ECONOMY#storyId#17848#sectio

nId#3177#newsFeedId#undefined

6.

Hub and spoke model

http://www.wisegeek.org/what-is-the-hub-and-spoke-model.htm

7. Crisil Research, Hub and Spoke Model

https://www.crisilresearch.com/industryasync.jspx?serviceId=3&State=null#

8.

http://en.wikipedia.org/wiki/Mahindra_%26_Mahindra

9. http://en.wikipedia.org/wiki/SsangYong_Motor_Company

10. http://www.tatamotors.com/media/press-releases.php?id=370

11.

http://www.tatamotors.com/media/press-releases.php?id=47912.

http://www.wsws.org/en/articles/1999/02/volv-f04.html

13. http://business.mapsofindia.com/automobile/finance/fdi-market.html

14. http://www.eximguru.com/exim/guides/how-to-

import/ch_16_impor_of_cars_vehicle_commerical_and_non_commercial.aspx

15.

http://www.livemint.com/Companies/hxvbJHwzWOE5tLtTtXcIWK/Hurdles-ahead-for-Ashok-Leyland-in-

bid-to-regain-market.html

16. CNG cleans up Delhi Air; Kerala Awaits her Turn,http://blog.ksidc.org/cng-cleans-up-delhi-air-kerala-awaits-her-turn/;Accessed on 12

thSept, 2013
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a 12 commercial vehicles

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