Auto industry analysis

By- Arabinda Kar

PGDM II Year

Automobile industry

Tenth largest in the world with an annual production of

approximately 2 million units

AUTOMOBILE

2 WHEELER 3 WHEELERPASSENGER

VEHICLECOMMERCIAL

VEHICLE

Trends in Automobile sector

Continue………….

Automobile Production Trends (Number of

Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger Vehicles

723,330 989,560 1,209,876 1,309,300 1,545,223 1,762,131

Commercial Vehicles

203,697 275,040 353,703 391,083 519,982 545,176

Three Wheelers

276,719 356,223 374,445 434,423 556,126 500,592

Two Wheelers

5,076,221 5,622,741 6,529,829 7,608,697 8,466,666 8,026,049

Grand Total

6,279,967 7,243,564 8,467,853 9,743,503 11,087,997 10,833,948

Automobile Domestic Sales Trends(Number of Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger Vehicles

707,198 902,096 1,061,572 1,143,076 1,379,979 1,547,985

Commercial Vehicles

190,682 260,114 318,430 351,041 467,765 486,817

Three Wheelers

231,529 284,078 307,862 359,920 403,910 364,703

Two Wheelers

4,812,126 5,364,249 6,209,765 7,052,391 7,872,334 7,248,589

Grand Total

5,941,535 6,810,537 7,897,629 8,906,428 10,123,988 9,648,094

Automobile Exports Trends (Number of

Vehicles)

Category 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Passenger Vehicles

72,005 129,291 166,402 175,572 198,452 218,418

Commercial Vehicles

12,255 17,432 29,940 40,600 49,537 58,999

Three Wheelers

43,366 68,144 66,795 76,881 143,896 141,235

Two Wheelers

179,682 265,052 366,407 513,169 619,644 819,847

Grand Total 307,308 479,919 629,544 806,222 1,011,529 1,238,499

Analysis of current scenario

High interest rates, high domestic oil prices and

inadequate vehicle financing have continued to affect

the overall automobiles sector

The current slowdown in economic growth and

automobiles industry has further deteriorated due to the

global financial market crisis which has created

volatility in stock markets and exchange rates and

aggravated lack of liquidity

Continued…....

Automobile companies are reducing production by shutting plants for a few days to avoid inventory build-up and in anticipation of seeing further downside

Four wheeler industry performance

Volumes plummeted 23.6% to 100k in Nov’08, led by a 21.2% decline in volumes of A2 segment (55% of domestic market) to 61k

units The overall industry de-grew by 8.1% to135k units in Nov’08.

Two wheeler Industry performance

volumes declined by 14.7% to 567k units as compared to 665k units in Nov’07

The Key player………….

Bajaj Auto Limited

BAL Auto is the second largest two-wheeler manufacturer in India with a market share ofmore than 20%

Financials    

Year to March FY08 FY09E

Revenues (INR mn) 90,455 94485

Rev. growth (%)   -0.4

EBITDA (INR mn) 12,929 11,383

Net profit (INR mn) 7,558 6,527

shares outstanding (mn) 144.7 144.7

EPS (INR) 52.2 45.2

EPS growth (%)   -13.4

P/E (x) 5.3 6.1

EV/EBITDA (x) 3.1 3.1

ROACE (%) 42.6 35.5

ROAE (%) 54.6 43.6

Growth metrics (%) FY09E

Revenues -0.4

EBITDA 11.45

PBT -8.3

Net profit -1.7

EPS -13.1

Thank You !