INDIA AUTOMOTIVE INDUSTRY TRENDS

Yong Yang, Sr. EconomistCorporate Economics and Strategic Issues

UMTRI India Auto ConferenceApril 20, 2011

SLIDE 1

• Overview of India

• India Infrastructure Conditions

• India Industry Characteristics

• India Industry Volume Outlook

• Ford Business in India

OUTLINE

SLIDE 2

TOTAL LAND AND POPULATION IN BRICS AND U.S.

813917,098,242 Russia

242018,514,877 Brazil

323109,826,675 U.S.

1391,3309,596,961 China

3571,1733,287,263 India

Population Density

(People/Sq. Km.)

Population

(2010, Mils.)

Land Area

(Sq. Km.)

SLIDE 3

2009 GDP PER CAPITA IN BRICS AND U.S.

10

19

3

46

7

0

10

20

30

40

50

Brazil Russia India China U.S.

$000s, PPP

SLIDE 4

REAL GDP GROWTH IN BRICS AND U.S.

7.5

4.0

8.610.3

2.9

(15)

(10)

(5)

0

5

10

15

20

1990 1995 2000 2005 2010

Brazil Russia India China U.S.

YoY % Change

SLIDE 5

TOTAL ROADWAYS IN BRICS AND U.S.

1,752

982

3,320

6,506

3,584

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Brazil Russia India China U.S.

Km (000's)

Source: CIA World Factbook, latest estimate

SLIDE 6

QUALITY OF ROADWAYS IN BRICS AND U.S.

106

118

89

11

50

0

20

40

60

80

100

120

140

Brazil Russia India China U.S.

World RankingWorld Ranking

Note: 2009-2010 ranking out of 133 countries

Source: World Economic Forum Survey

Bette

r

SLIDE 7

LENGTH OF EXPRESSWAYS

41.0

16.3

2.10.5

65.1

0.2

75.2

0

10

20

30

40

50

60

70

80

90

1990 1995 2000 2005 2009 2008 2008

China India U.S.

Source: CEIC China Database, CIA World Factbook: latest is 2008

KM, 000s

SLIDE 8

INDIA AND CHINA -- TOTAL VEHICLE SALES

0.51.5

2.2

5.9

18.3

0.40.6 0.8

1.5

3.1

0

4

8

12

16

20

1990 1995 2000 2005 2010

India China

36

31

(20)

(10)

0

10

20

30

40

50

1990 1994 1998 2002 2006 2010

India China

Vehicle Sales Vehicle Sales Growth

Mil. Units YoY % Chg.

SLIDE 9

3038

23

78

248

0

50

100

150

200

250

300

Brazil Russia India China U.S.

Latest

VEHICLE DENSITY IN BRICS AND U.S.

Mil.

Vehicles in Operation (VIO)

204

319

28

1,000

72

0

200

400

600

800

1,000

1,200

Brazil Russia India China US

Latest

VIO Per 1,000 Drivers

Vehicle Density

SLIDE 10

25

19

17

12

0

5

10

15

20

25

30

2000 2200 2400 2600 2800

Vehicles per 1,000 Driving-Age People

GDP PPP per Capita

( in 000s of $2005)

India (2004-2008)

China (1996-2000)

INDIA AND CHINA -- VEHICLE DENSITY COMPARISON

SLIDE 11

INDIA AND CHINA -- FIRST TIME BUYERS DOMINATE

63%

74%

India China

SLIDE 12

India

INDIA AND CHINA -- AGE DISTRIBUTION OF VEHICLE BUYERS

Source: Survey on National demand for passenger vehicles - private user survey 2009, SIC, McKinsey Automotive Branding Survey 2007

20s 40s30s 50+

10%

34%

38%

18%

China

20s 40s30s 50+

5%

33%

42%

20%

Age Group Age Group

SLIDE 13

INDIA AND CHINA -- VEHICLE SALES FINANCING

India

2009 Share of Financing

29%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Financing

China

2009 Share of Financing

92%

8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Financing

SLIDE 14

INDIA AND CHINA -- NET REVENUE DISTRIBUTION

<5,000

8,500

14,500

20,000

25,000

30,000

>30,000

India

0 100 200 300 400 500 600 700 800 900

Volume (000)

Net Revenue

($PU)

A & Sub B Mini Com.

A & Sub B BMini Com.

B AUVC

C

AUVB

SUV

China

<5,000

8,500

14,500

20,000

25,000

30,000

>30,000

0 500 1000 1500 2000 2500 3000 3500

Volume (000)

Net Revenue

($PU)

Mini CommercialA &

Sub B

A & Sub B

B C

C

C

SUV

B CD+

SUV

MPV

CD+SUV

MP V

SUV

SUV

SUV

CD+

CD+

Premium

B

SLIDE 15

S-CURVE INDUSTRY MODEL

S-Curve

0

100

200

300

400

500

0 5 10 15 20 25 30 35 40 45

Vehicle Density

(Normalized)

GDP PPP per Capita

( In 000s of 2005$)

Take-off MaturingDeveloping Developed

India

China

SLIDE 16

①

②

③

482381653550Tier 3

1,069

245

163

789

2008

Driving-Age People (mil.)

1,150

302

202

987

2020

1,317

356

236

1,142

2008

Population (mil.)

1,385

410

275

1,338

2020

National

China

Tier 2

Tier 1

INDIA'S POPULATION AND GDP BY REGION

2007 GDP PPP per Capita

Tier 1

Tier 2

Tier 3

GDP PPP per Capita > $4,000

GDP PPP per Capita < $2,500

$2,500< GDP PPP per Capita < $4,000

SLIDE 17

0

2,000

4,000

6,000

8,000

10,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

National Tier 1 Tier 2 Tier 3

Tier 1

“Take-off” Level of Income

$2005

Tier 2

INDIA'S GDP PER CAPITA BY REGION

SLIDE 18

120

169

207183

284

355

0

100

200

300

400

2009 2015 2020

India

China

Million

Number of Households Able to Afford Vehicles

INDIA AND CHINA -- VEHICLE AFFORDABILITY

SLIDE 19

13.5

16

0

5

10

15

20

25

2009 2011 2013 2015 2017 2019

China

India (Industry Volume W/Trend GDP Growth=9% as Government Plan)India (Industry Volume W/Trend GDP Growth=10% as China's experience)

Mil. Units

India

(2009-2020)

China

(2000-2011)

INDIA AND CHINA -- VEHICLE SALES TRENDS

Note: India volume sales trends are based on model projections. They do not represent Ford business assumptions.

SLIDE 20

48

87

57

108

199

35

59

108

11 162628

0

40

80

120

160

200

2010 2015 2020

National Tier 1 Tier 2 Tier 3

Vehicles Per 1,000 Driving-Age People

INDIA NATIONAL AND REGIONAL DENSITY TRENDS

SLIDE 21

1.53.4

6.21.1

2.6

5.4

0.4

0.9

1.8

0

2

4

6

8

10

12

14

2010 2015 2020

Tier 1 Tier 2 Tier 3

Mil. Units

37%

14%

40%

46%

13%

38%

49%

14%

49%

INDIA NATIONAL AND REGIONAL SALES TRENDS

SLIDE 22

U.S.

Brazil

India

China

Russia

0

2

4

6

8

10

0 2 4 6 8 10 12

Average Annual Vehicle Sales Growth 2012- 2016 (%)

Trend GDP

Growth (%)Bubbles Proportional to Estimated 2010 Industry Volume

INDUSTRY VOLUME AND GDP IN BRICS AND U.S.

SLIDE 23

ASIA PACIFIC -- INDUSTRY VOLUME SHARES

2010

ASEAN 5

IndiaRest of

Asia

Pacific

ChinaChina

60%

ASEAN 5

8%

30.7Mils.

Rest of AsiaPacific 23%

India10%

2020

SLIDE 24

83.9

2.6%

0

10

20

30

40

50

60

70

80

90

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%Ford Share

Ford Sales

Sales, 000s Share

INDIA -- FORD INDUSTRY VOLUME AND SHARE

SLIDE 25

71%

18%7%

4%

Figo

Fiesta

Endeavor

INDIA -- FORD PRODUCT SHARE IN 2010

Ikon

SLIDE 26

70%

30%

$8,500

INDIA -- FORD PRODUCT PRESENCE IN 2010

Ford Shares Industry Revenue Distribution

10%

0%

SLIDE 27

2%

3%

3%

3%

4%

9%

12%

24%

35%Maruti Suzuki

Hyundai

Tata

Mahindra

Chevrolet

Toyota

Ashok Leyland

Ford

Honda

INDIA -- FORD MARKET POSITION IN 2010

SLIDE 28

• India’s demographic and economic fundamentals will provide support for future robust industry growth

• Tier 1 region has entered the take-off stage in 2010 and tier 2 region will enter the take-off stage around 2016

• Industry growth is expected to accelerate in the next decade; disparity in vehicle ownership will widen initially

• Ford is making steady progress in the India market

SUMMARY