Indian Automotive Industry OICA Round Table 22 October 2010 New Delhi Indian Automotive Industry Dr. Pawan Goenka President SIAM President Automotive and Farm Equipment Sectors, Mahindra & Mahindra Ltd.

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

SIAM Society of Indian Automobile Manufacturers Apex national industry body representing all major vehicle manufacturers in India 46 members Provides a window to the automobile industry in India Close working with stakeholders in the formulation of the policies, regulations and standards related to automobiles Link between the industry and other bodies including the media Interacts with various international bodies OICA, IMMA, UN, APEC AD and counterpart associations like SMMT, VDA, JAMA, TAIA, AFM, ANFIA, ACEA, etc. SIAM is the apex industry body which is a non-profit organization representing vehicle and vehicular engine manufacturers. It has 37 members. It brings out regularly statistical reports giving production, sales an exports. The Three main agenda pursued by SIAM are Economic, Technical and Public Policy. It organises Auto Expo every two years along with CII and ACMA. The next Auto Expo is scheduled in January 2006 and we invite you to that major event of ours. The main objective of SIAM is to promote sustainable development of Indian automobile industry.

SIAM Mission: Growth with Responsibility To become a growth engine of the Indian economy by propelling the Indian Auto industry to a global $ 145 bn industry by 2016 whilst promoting sustainability by addressing the multiple challenges arising out of emissions, climate change, energy security and safety. SIAM is the apex industry body which is a non-profit organization representing vehicle and vehicular engine manufacturers. It has 37 members. It brings out regularly statistical reports giving production, sales an exports. The Three main agenda pursued by SIAM are Economic, Technical and Public Policy. It organises Auto Expo every two years along with CII and ACMA. The next Auto Expo is scheduled in January 2006 and we invite you to that major event of ours. The main objective of SIAM is to promote sustainable development of Indian automobile industry.

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

India : Rank by Automotive Production Global Rank by Automotive Production Source : OICA

15% CAGR Growth in 8 Years 8.2 9.0 11.6 13.8 14.9 18.5 19.5 19.4 24.8 Cars 15 % CAGR UVs 13 % CAGR MHCVs LCVs 23 % CAGR MPVs 12 % CAGR Cars UVs MHCVs LCVs MPV 2.0 2.3 2.8 3.1 3.6 4.0 3.5 4.4 42.0 48.1 53.6 62.1 70.5 78.5 72.5 74.4 93.7 3W 2W Source : SIAM

Excellent Growth in 2009-10 Segment 2009-10 Growth Personal Vehicles 26% Cars : 25% UV : 21% MPV : 41% Commercial Vehicles 38% LCV : 43% MHCV : 34% Three Wheelers Two Wheelers Total Auto Industry

Data for Jan – Aug 2010

Good Growth in Apr-Sep 2010 33% 42% 26% 20%

Source: Hindu Business Line, 9 Oct 2010

Good GDP Growth High Consumer Confidence Infrastructure spending Thrust on rural employment Stable Auto Finance Rates New Launches Generate Excitement

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

Growth in Exports from India PVs 30 % CAGR CVs 18 % CAGR 3W 35 % CAGR 2W 2W 3W CV PV Source : SIAM

Export Performance: Apr-Sep 2010 1% 84 % 100 % 52 %

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

PV: Acquisition Cost Car Sales ‘000

PV: Fuel Efficiency US is setting FE norms for Petrol Cars to achieve 35 mpg (14.8 kmpl) Majority of Indian cars offer this FE

PV: Product Features

CV: Affordability is the Key Truck Holding Pattern Truck Holding Pattern India US Truck is Livelihood Minimise Cost by all means Maximise Returns by all means Source: Asian Institute of Road Transport and M&M Study

CV: The Need for Last Mile Connectivity LCV Goods < 3.5T Sales Volume in ‘000 40% CAGR

Formation of a Hub and Spoke Model 25 % CV > 16 T GVW 24 % 47 % LCV < 3.5 T GVW 13 % Sales Volume in ‘000

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

Opportunity : Low Penetration Levels Country Cars / 1,000 people Germany 565 France 480 US 453 Japan 451 Malaysia 271 South Korea 238 Mexico 145 Brazil 103 Thailand 57 China 27 Indonesia 18 India 10 Philippines 9 Country 2W / 1000 people Thailand 286 Malaysia 258 Italy 166 Japan 100 Spain 90 Indonesia Switzerland 77 Germany 69 China 59 India 43 US 18 Country Vehicles /km Germany 554 Thailand 426 South Korea 408 Mexico 256 Malaysia 205 Japan 162 France 99 US 98 Indonesia 51 China 48 Philippines 38 Brazil 35 India 10 First In comparision India is hugely under motorised. 7 cars per thousand Even Delhi is 98 ! Source: WARDS, 2009; All figures for 2008

Opportunity: Strong GDP Forecast Source : IMF (World Economic Outlook April 2010)

Growth Drivers: Personal Vehicles Young Demographics High Aspiration of Auto Ownership Rising Disposable Incomes Rural development Travel for employment, Trade etc. Inadequate public transport system Improving access to vehicle financing

Growth Drivers: Commercial Vehicles Roads carry a dominant share of traffic 60% of freight and 85% of passenger Infrastructure development Growth in freight generating sectors Agriculture, Fertilisers, Mining, Cement, Retail Development of Urban transportation system Regulation Overloading, Scrap of old vehicles Procurement by defense

Indian Auto Industry to Double its contribution to GDP by 2016 $145 bn by F16 16% CAGR Vision 2016 “By 2016, India will emerge as the destination of choice in Asia for the design & manufacture of automobiles and automotive components. The output of the India’s automotive sector will be $ 145 billion by 2016, contributing to 10% of India’s Gross Domestic Product and providing employment to 25 million persons additionally.” $34 bn In F07 Source : SIAM & AMP 2006-16

Interventions Under Implementation Investment - Tariff Policy & Investment Support Infrastructure Expansion of Domestic Demand Encouraging Exports Support to Develop R&D Long Term Emission Roadmap Harmonization of Safety Standards & Road Safety Incentivizing Modernization of Vehicle Fleet Inspection & Certification Systems Computerization of RTOs & Driver Licensing System Ensuring Availability of Human Resource

Target to Build 20km Roads / Day I have set a target of 20 km of road per day leading to 7,000 km in a year. My job is to create a paradigm shift in attitude, kilometers and approach.” Mr. Kamal Nath Union minister of Road Transport & Highways

Aggressive Road Development Project Road Improvement New Roads Port connectivity Hilly Roads Target : 49,987 km Completed : 14,382 km Under Impl. : 9,066 km Work to start : 26,381 km Status as on 31 Aug 2010 Source : nhai.org

Presentation Outline Introduction to SIAM Overview of Indian Auto Industry Domestic Market Performance Exports Performance Insights to Indian Market India Opportunity and Growth Plan 2010-11 Outlook

2010-11 Outlook Source : SIAM, CRISIL Research

2010-11 Outlook Over 2.4 million Passenger Vehicles Over 600,000 Commercial Vehicles Over 11 million Two wheelers Over 500,000 Three Wheelers Source : SIAM, CRISIL Research

Thank You SIAM Society of Indian Automobile Manufacturers