Structural Changes in Indian Automobile Industry *

Indian automobile industry has undergone vast structural changes in the post reform period. Almost all major world automobile manufacturers has taken foothold in the Indian market essentially in the form of joint venture or in collaboration with local companies. While a majority of the foreign entities manufacture automobiles in India with their Indian partners, some foreign companies such as, Daimler Chrysler India Private Limited ( s class) and BMW import almost full vehicles in knocked-down conditions and assemble them within India . The latter mainly confined to high-end cars especially in premium and luxury segments and their total share in production stands only 0.3 per cent in 2007-08 (Apr-Aug). Many of the foreign players has also targeted India ’s export market.

Foreign collaboration was first initiated in 1954 when M/S. Tata Locomotive and Engineering Company Limited entered into a collaboration with M/S Daimler Benz AG of West Germany to manufacture commercial vehicles.

Foreign collaboration or joint ventures with Indian automobile companies has been known now for more than five decades. But, the ushering in of economic reforms in 1991 and easing of licensing policy and foreign direct investment norms in India have changed the automobile scene beyond recognition. There are now an array of foreign companies present in the Indian automobile industry.

The Indian automobile industry consists of five segments viz., passenger cars and multi-utility vehicles; commercial vehicles; two-wheelers; three-wheelers; and tractors. However, our discussion is confined to first four segment only. Roadways and railways are mainly the two modes of transport in the country, though waterways are deployed in limited areas. Road transportation accounts for about 70 per cent of passenger traffic and 85 percent of goods traffic in spite of stiffer competition from the railways in recent years.

Changes in Production

Apart from the veracity, it is the mindboggling rate at which the automobile sector has grown in the past two decades, that stands out. Automobile production during this period galloped 6-times to reach 1,10,65,142 units in 2006-07 from 17,92,229 units in 1987-88 or at a CAGR of 9.5 per cent (Table 1). Expansion has been much more rapid in the new century, after 2000-01, at a CAGR of 15.1 per cent.

Production of Passenger vehicles consisting of passenger cars, utility vehicles and multipurpose vehicles rose from 1,83,905 units in 1987-88 to 15,44,850 units or at a slightly faster compounded annual growth rate of 11.2 per cent. Commercial vehicles production during the two-decade period increased by 4,09,900 units to reach 5,20,000 by 2006-07 with CAGR of 8.1 per cent. A five lakh units increase had been witnessed in three-wheeler production. In spite of the stupendous increase of 6 million units in two- wheeler production taking place during the last two decade – from 14,37,112 units in 1987-88 to 84,44,168 units in 2006-07 -, the annual compound growth rate works out to be only 9.3 per cent mainly because of the recent fall in demand for two-wheelers.

Table 1: Automobile Production									(number)
	Grand Total		Passenger Vehicles		Commercial Vehicles		Three Wheelers		Two Wheelers
2006-07	11065142	(13.6)	1544850	(18.0)	520000	(33.0)	556124	(28.0)	8444168	(11.0)
2005-06	9743503	(15.1)	1309300	(8.2)	391083	(10.6)	434423	(16.0)	7608697	(16.5)
2004-05	8467853	(16.9)	1209876	(22.3)	353703	(28.6)	374445	(5.1)	6529829	(16.1)
2003-04	7243564	(15.3)	989560	(36.8)	275040	(35.0)	356223	(28.7)	5622741	(10.8)
2002-03	6279967	(18.1)	723330	(8.0)	203697	(25.3)	276719	(30.1)	5076221	(18.8)
2001-02	5316302	(11.7)	669719	(4.5)	162508	(3.7)	212748	(4.7)	4271327	(13.6)
2000-01	4759392	(1.7)	640934	(8.7)	156706	(9.7)	203234	(6.8)	3758518	(0.5)
1999-00	4843449	(14.7)	701655	(39.2)	173524	(27.7)	190259	(9.0)	3778011	(12.0)
1998-99	4223469	(5.5)	504037	(5.9)	135891	(15.5)	209033	(11.0)	3374508	(9.8)
1997-98	4004083	(0.4)	535655	(1.8)	160894	(33.1)	234867	(6.0)	3072667	(3.1)
1996-97	3987125	(13.8)	545728	(20.1)	240551	(10.6)	221619	(25.6)	2979227	(12.2)
1995-96	3504358		454491		217437		176413		2656017
1990-91	2272703		217702		144553		89162		1821286
1987-88	1792229		183905		110100		61112		1437112

Note: Figures in brackets are percentage variations over the year.

Source: Society of Indian Automobile Manufacturers ( SIAM )

III

Compositional Changes in the Share of Each Segment

Vast changes have been witnessed in the composition of different segments of automobiles during the last two decades as can be seen from Table 2.

Table 2: Automobile Production; Share of Each Segment (In Percentages to total)
Year	Total	Passenger	Commercial	Three	Two
		Vehicles	Vehicles	Wheelers	Wheelers
2006-07	11065142	(14.0)	(4.7)	(5.0)	(76.3)
2005-06	9743503	(13.4)	(4.0)	(4.5)	(78.1)
2004-05	8467853	(14.3)	(4.2)	(4.4)	(77.1)
2003-04	7243564	(13.7)	(3.8)	(4.9)	(77.6)
2002-03	6279967	(11.5)	(3.2)	(4.4)	(80.8)
2001-02	5316302	(12.6)	(3.1)	(4.0)	(80.3)
2000-01	4759392	(13.5)	(3.3)	(4.3)	(79.0)
1999-00	4843449	(14.5)	(3.6)	(3.9)	(78.0)
1998-99	4223469	(11.9)	(3.2)	(4.9)	(79.9)
1997-98	4004083	(13.4)	(4.0)	(5.9)	(76.7)
1996-97	3987125	(13.7)	(6.0)	(5.6)	(74.7)
1995-96	3504358	(13.0)	(6.2)	(5.0)	(75.8)
1990-91	2272703	(9.6)	(6.4)	(3.9)	(80.1)
1987-88	1792229	(10.3)	(6.1)	(3.4)	(80.2)
Source: SIAM

The share of passenger vehicles has gained 4 percentage points from about 10 per cent in 1987-88 to 14 per cent in 2006-07. The share of commercial vehicles in the total production until 1996-97 hovered around 6 per cent. Consistent with the general economic condition and industrial growth, a clear loss in their share during the next 6 years are seen. The share of CVs picked up in the next three years with the manufacturing sector starting to show good performance. During the period, the share of three wheelers hovered around 5 per cent in most of the years. Gain in passenger vehicles share seems to be at the cost of the share of two-wheeler production. Share of two-wheeler production from a high of 80.2 per cent in 1987-88 has lost ground by about 4 percentage points to reach 76.3 per cent in 2006-07.

The above reflects the social upper mobility of the middle classes whose rapid increases in incomes, particularly after the 1990s, have made it possible to move from two-wheelers to four-wheelers. Two-wheelers themselves have shown increases due to the upward mobility of the middle classes though the base effect is felt more in four-wheelers.

Changes in Shares of Different Categories within Two-Wheeler Segment During the Last Decade

It can be seen from Table 4 that there has been vast changes in product composition of two-wheeler industry which has registered a 11 per cent annual compounded growth rate during the last decade ending 2006-07.

Again, the upper mobility of the middle class has generated accelerated demand for motor vehicles as against scooter and mopeds

Production of scooter, which was more than 1.3 million units with a share of 44 per cent in the total two wheeler production in the country shrunk to 9.4 lack units or to a share of 11 per cent in 2006-07. Similarly, the production of mopeds also declined from

6.8 lack unites to 3.8 lack units and their share from 23 per cent to to a tiny 4 per cent during the period. On the other hand production of motor cycle grew from 9.9 lack units in 1996-97 to 71.1 lack units with in the ten year period ending 2006-07. Correspondingly their share rose from 33 per cent to 84 per cent during the period.

Table 4: Production and Share of Different Categories of Two Wheelers
(Production in number and share in per cent)
Year	Two-Wheelers		Scooter		Motor Cycles		Mopeds
	Production	Share	Production	Share	Production	Share	Production	Share
2006-07	8444168	100	943974	11	7112225	84	379987	4
2005-06	7608697	100	1021013	13	6207690	82	379994	5
2004-05	6529829	100	987498	15	5193894	80	348437	5
2003-04	5622741	100	935279	17	4355168	77	332294	6
2002-03	5076221	100	848434	17	387615	8	351612	7
2001-02	4271327	100	937506	22	2906323	68	427498	10
2000-01	3758518	100	879759	23	2183785	58	694974	18
1999-00	3778011	100	1259423	33	1794078	47	724510	19
1998-99	3374508	100	1315055	39	1387286	41	672167	20
1997-98	3072667	100	1279467	42	1125958	37	667242	22
1996-97	2979227	100	1312920	44	988233	33	678074	23
Source : SIAM

Customer preference towards motor cycles with more powerful engines can be seen from the fact that production of lower engine capacity motor cycles are virtually nil. The share of next category engines though still high at 78 per cent, has slowly given way to still higher category engines. There is thus a discernable preference towards more power full engine motor cycles whose share in production has increased during the four- year period as shown in Table 5.

Table 5. Production of Different Segment of Motor Cycles
			Engine Capacity
	All		< 75 cc		=>75 cc - <125 cc		=>125 cc - < 250 cc		=> 250 cc
2006-07	7112225	100	0	0.0	5534484	77.8	1545480	21.7	32261	0.5
2005-06	6207690	100	0	0.0	5095860	82.1	1081409	17.4	30421	0.5
2004-05	5193894	100	19503	0.4	4349909	83.8	794801	15.3	29681	0.6
2003-04	4355168	100	32014	0.7	3765958	86.5	528545	12.1	28651	0.7
Source : SIAM

The above feature is once again confirmed if one looks at the sales performance of motorcycles from Table 6. Sale of motorcycles with the engine capacity 125 to 250 cc recording a 3-fold increase from 4. lack in 2003-04 to 13.5 lack in 2006-07, or 11 per cent to 21 per cent of the total sales.

Table 6. Sales of Different Segment of Motor Cycles
			Engine Capacity
	All		< 75 cc		=>75 cc -		=>125 cc -		=> 250 cc
					< 125 cc		< 250 cc
2006-07	6553664	100	0	0.0	5173575	78.9	1349710	20.6	30379	0.5
2005-06	5810599	100	870	0.0	4805579	82.7	975488	16.8	28662	0.5
2004-05	4964753	100	19195	0.4	4176532	84.1	740971	14.9	28055	0.6
2003-04	4170445	100	32098	0.8	3658628	87.7	452711	10.9	27008	0.6
Source : SIAM

An Overview of Automobile Domestic Sales

Table 7 shows the general trends in the domestic sales of automobiles during the last 6 years. Automobile domestic sales grew at an annual compounded growth rate of 14.1 per cent between 2001-02 and 2006-07 with commercial vehicles category registering a stupendous average annual growth rate of 26.1 per cent between 2001-02 and 2006-07 with both medium and heavy as well as light commercial vehicles contributing for the rise equally In passenger vehicles category, passenger cars and utility vehicles rose at CAGR of 16.2 per cent each. However, CAGR in multipurpose vehicles is only 6.1 per cent. Domestic sales of three wheelers registered CAGR of 15.1 per cent.

Two wheelers CAGR works out to be only 13.3 per cent with motor cycles registering CAGR of 17.8 per cent.

Table 7 : Automobile Domestic Sales Trends
						(Number)
	2006-07	2005-06	2004-05	2003-04	2002-03	2001-02
Total Sales	10109037	8906428	7897629	6810537	5941535	5225788
Growth in per cent	13.5	12.8	16.0	14.6	13.7
1.Passenger Vehicles	1379698	1143076	1061572	902096	707198	675116
Growth in per cent	20.7	7.7	17.7	27.6	4.8
(i) Passenger Cars	1076408	882208	820179	696153	541491	509088
Growth in per cent	22.0	7.6	17.8	28.6	6.4
(ii) Utility Vehicles	220199	194502	176360	146388	113620	104253
Growth in per cent	13.2	10.3	20.5	28.8	9.0
(iii) Multi-purpose	83091	66366	65033	59555	52087	61775
Growth in per cent	25.2	2.0	9.2	14.3	-15.7
2. Commercial Vehicles	467882	351041	318430	260114	190682	146671
Growth in per cent	33.3	10.2	22.4	36.4	30.0
(i) M & HCVs	275600	207472	198506	161395	115711	89999
Growth in per cent	32.8	4.5	23.0	39.5	28.6
(ii) LCVs	192282	143569	119924	98719	74971	56672
Growth in per cent	33.9	19.7	21.5	31.7	32.3
3. Three Wheelers	403909	359920	307862	284078	231529	200276
Growth in per cent	12.2	16.9	8.4	22.7	15.6
4. Two Wheelers	7857548	7052391	6209765	5364249	4812126	4203725
Growth in per cent	11.4	13.6	15.8	11.5	14.5
(i) Scooters	940673	909051	922428	886295	825648	908268
Growth in per cent	3.5	-1.5	4.1	7.3	-9.1
(ii) Motorcycles	6553664	5810599	4964753	4170445	3647493	2887194
Growth in per cent	12.8	17.0	19.0	14.3	26.3
(iii) Mopeds	355870	332741	322584	307509	338985	408263
Growth in per cent	7.0	3.1	4.9	-9.3	-17.0
Source: SIAM

An Overview on Export Performance

Automobile industry performance in the export front was between 2001-02 and 2006-07 was very good. In this period export of automobiles grew 5 times to reach more than I million units by 2006-07 from a mere 1.8 lack units in 2001-02. At this level , the export works out to be 9.1 per cent of the total production in 2006-07 as against 3.5 per cent in 2001-02. With an average annual growth of 31.3 per cent in passenger car export during the period is stupendous and 15.6 per cent of the production is exported in 2006-07. About 26 per cent of three wheeler production is exported in 2006-07. Export of two wheelers grew at an average annual rate of 42.8 per cent during the five year period; with 7.3 per cent of their production being exported. Export of motorcycles increased by 9.6 times during the period with 7.7 per cent of total motorcycle production being exported.

Table 8 : Automobile Exports Trends
						(Number)
	2006-07	2005-06	2004-05	2003-04	2002-03	2001-02
Total Exports	1011278	806222	629544	479919	307308	184680
Growth in per cent	25.4	28.1	31.2	56.2	66.4
1. Passenger Vehicles	198478	175572	166402	129291	72005	53165
Growth in per cent	13.0	5.5	28.7	79.6	35.4
(i) Passenger Cars	192745	169990	160670	125320	70263	49273
Growth in per cent	13.4	5.8	28.2	78.4	42.6
(ii) Utility Vehicles	4403	4489	4505	3049	1177	3077
Growth in per cent	-1.9	-0.4	47.8	159.0	-61.7
(iii) Multi-purpose	1330	1093	1227	922	565	815
Growth in per cent	21.7	-10.9	33.1	63.2	-30.7
2. Commercial Vehicles	49766	40600	29940	17432	12255	11870
Growth in per cent	22.6	35.6	71.8	42.2	3.2
(i) M & HCVs	18838	14078	13474	8188	5638	4824
Growth in per cent	33.8	4.5	64.6	45.2	16.9
(ii) LCVs	30928	26522	16466	9244	6617	7046
Growth in per cent	16.6	61.1	78.1	39.7	-6.1
3. Three Wheelers	49766	40600	29940	17432	12255	11870
Growth in per cent	22.6	35.6	71.8	42.2	3.2
4. Two Wheelers	619138	513169	366407	265052	179682	104183
Growth in per cent	20.6	40.1	38.2	47.5	72.5
(i) Scooters	35685	83934	60699	53687	32566	28332
Growth in per cent	-57.5	38.3	13.1	64.9	14.9
(ii) Motorcycles	545887	386054	277123	187287	123725	56880
Growth in per cent	41.4	39.3	48.0	51.4	117.5
(iii) Mopeds	37566	43181	28585	24078	23391	18971
Growth in per cent	-13.0	51.1	18.7	2.9	23.3
Source: SIAM

VII

Performance during the current Financial year so far (April-August)

During April-August 2007, the production of automobiles in the country declined by 1,11,983 units from 43,86,661 automobile produced during April-August 2006.

Growth in sales has fallen by 5.0 per cent from an impressive growth of 16.7 per cent last year. However, the export during the period registered an increase of 19.0 per cent as compared to 28.1 per cent growth during the comparable period of 2006 (Table 9).

Table 9: Trends in Automobile Production, Sales and Exports
					(Numbers)
	April-August
	2007-08		2006-07		2005-06
Production	4274678	(-2.6)	4386661	(19.1)	3683731
Sales	3695809	(-5.0)	3889305	(16.7)	3331378
Export	510725	(19.0)	429335	(28.1)	335093
Note: Figures in brackets are variations over the corresponding
period of previous year.
Source: Society of Indian Automobile Manufacturers ( SIAM )

Fall in sales usually ensue from production. The declining trend in the consumer demand due to high cost of loans on account of increasing interest regime might have been an important reason for the downward trend in sales. The sales figures which have reached a peak of more than 10 million units in October 2006 steadily declined and reached about 75 thousand unit by August 2007, albeit, through fluctuation. (Table 10).

Passenger Car Segment

Depending upon the size, passenger cars are categorised into 6 segments. Different type of cars are categorised as mini (up to 3400 mm), compact (3401-4000 mm), mid-size (4001-5000 mm), executive (4501-4700 mm), premium (4701-5000 mm) and luxury (5001 mm and above). Thirteen automobile companies manufacture the passenger cars in India with some companies specialising one or more type of cars. In India , there is not a single company, which manufactures all 6 type of cars. For example, Daimler Chrysler India Pvt. Ltd. and BMW India Pvt Ltd are specialising only in the three high end cars. Similarly, Maruti Udyog Ltd specialises only in low end cars i.e.. manufacturing mini., compact and mid type of cars. Moreover, mini cars are manufactured by only Maruti Udyog Ltd.

Table 10: Monthly Production and Sales of Automobiles
						(Numbers)
	Automobile Production				Automobile Sales
	2007-08		2006-07		2007-08		2006-07
April	835496	(-10.6)	835952	(-10.7)	732724	(-16.6)	756828	(-13.1)
May	881193	(5.5)	942005	(12.7)	790204	(7.8)	846998	(11.9)
June	837484	(-5.0)	878607	(-6.7)	751360	(-4.9)	803487	(-5.1)
July	817153	(-2.4)	887511	(1.0)	683684	(-9.0)	730194	(-9.1)
August	840788	(2.9)	770541	(-13.2)	750103	(9.7)	708324	(-3.0)
September			1014339	(31.6)			979890	(38.3)
October			998540	(-1.6)			1011544	(3.2)
November			1021191	(2.3)			861161	(-14.9)
December			836643	(-18.1)			771630	(-10.4)
January			959974	(14.7)			895781	(16.1)
February			914806	(-4.7)			826366	(-7.7)
March			934742	(2.2)			878059	(6.3)
Note: Figures in brackets are percentage variations over the corresponding period of
Previous year
Source: Society of Indian Automobile Manufacturers ( SIAM )

During April-August 2007, the passenger car production and sales in India at 565,941 units and 463,799 units, respectively, marked a growth of 13.3 per cent and 13.5 per cent over the previous year. These growth rates are much below the respective rates of 22.1 per cent 23.0 per cent during the corresponding period last year.

The production of mini car declined by 23.3 per cent during the period under review (Table 11). Their sales also witnessed a decline of 10.1 per cent during the same period, resulting in shrinkage in their market share of sales in mini car segment from 9.9 per cent in 2005-06 to 6.3 per cent in 2007-08.

About 90 per cent of passenger car production and sales in India is in ‘compact’ and ‘mid-size’ car segments. The production of ‘compact car’, during the review period, augmented by 66,801 units to 411,948 during April-August 2007 to the production levels in the comparable period of 2006 when the production also increased by 61,037 units. However, the growth in sales in this segment witnessed a drastic fall from 30.1 per cent during April-August 2006 to 15.4 per cent during April-August 2007. Export performance in this segment, however, has been satisfactory during April-August 2007, with 69,545 units exported as against 54,092 units during the comparable period of 2006.

Production in mid-sized car forms about 18-19 per cent of the total car production. Production of these cars increased by only 3.4 per cent during the current year as against 23.9 per cent during April-August 2006 (Table 11). Unlike the compact cars, the growth in sales performance in mid-size car segment is remarkable with 12,722 units being sold during the review period as against 7.030 units in 2006. Export in this segment drastically fell from 21,720 units in April-August 2006 to 8,748 unit during April-August 2007.

Table 11: Production. Sales and Export of different Categories of Cars
								(Number)
			Production			Sales			Export
		Apr-Aug	Production	Growth	Share	Sales	Growth	Share
1. Mini	Upto 3400 mm	2007-08	31625	-23.3	5.6	29444	-10.1	6.3	6390
		2006-07	41247	20.6	8.3	32765	-0.1	8.0	6065
		2005-06	34210		8.4	32791		9.9	3685
2. Compact	3400-4000 mm	2007-08	411948	19.4	72.8	323696	15.4	69.8	69545
		2006-07	345147	21.5	69.1	280510	30.1	68.6	54092
		2005-06	284110		69.4	215586		64.9	55578
3. Mid-size	4001-4500 mm	2007-08	99381	3.4	17.6	90898	16.3	19.6	8748
		2006-07	96079	23.9	19.2	78176	9.9	19.1	21720
		2005-06	77561		19.0	71146		21.4	12951
4. Executive	4501-4700 mm	2007-08	19801	30.2	3.5	16643	13.0	3.6	0
		2006-07	15213	32.0	3.0	14723	42.3	3.6	0
		2005-06	11526		2.8	10347		3.1	0
5. Premium	4701-5000 mm	2007-08	2988	66.6	0.5	2866	24.4	0.6	4
		2006-07	1793	3.5	0.4	2303	-2.7	0.6	4
		2005-06	1733		0.4	2368		0.7	7
6. Luxury	=> 5001 mm	2007-08	198	182.9	0.0	252	77.5	0.1	0
		2006-07	70	9.4	0.0	142	140.7	0.0	0
		2005-06	64		0.0	59		0.0	0
Total		2007-08	565941	13.3	100.0	463799	13.5	100.0	83687
		2006-07	499549	22.1	100.0	408619	23.0	100.0	81881
		2005-06	409204		100.0	332297		100.0	72221
Note: Figures in brackets are percentage variation over the corresponding period of previous year Source: Society of Indian Automobile Manufacturers ( SIAM )

The premium, executive and luxury segments hardly formed 5 per cent in total production or sales.

Major Players in Passenger Car Segments

Table 12 presents the performance of major players in passenger car segments. Maruti Udyog Ltd. with a share of 48 per cent in production , 40 per cent share in sales and 22.4 per cent share in exports, top the performance list during April-August 2007. Production of Maruti Udyog Ltd during the review period grew by 21.8 per cent as compared to 19.9 per cent last year mainly because of large growth about 52 per cent in its mid-size segments cars, like Esteem, Baleno, SX4,. And 30.5 per cent in its compact segment cars Alto, Wagon R, Zen and Swift. However, production of its flag ship model Maruti 800 dipped by 2.8 per cent during the review period.

With about 24 per cent share in production and 14 per cent share in sales and about 67 per cent in export, Hyundai Motor India Ltd. came second during the same period. Production of its mid-size models, Accent and Verna, dipped by 9.2 per cent during the review period. However, its compact models Santro and Getz rose by 304 per cent over the corresponding period last year. On the other hand, the company witnessed fall in their sales in the case of its compact models and a rise in their mid-size models.

Tata Motors Ltd occupied third position with 13.3 per cent in production, 11.7 per cent share in sales and 7.0 per cent in exports. While its compact model, Indica registered a decline of 4.0 per cent in production during April-August 2007, its sales witnessed a marginal increase. Its. mid-size models, Indigo and Indigo Marina, declined in both production and sales front.

Table 12. Company wise Passenger Cars Production, Sales and Export
							(Number)
	Production			Sales			Export
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
Total Passenger Cars	565941	499549	409204	590653	519930	431116	86916	84739	74327
Annual Growth	(13.3)	(22.1)		(13.6)	(20.6)		(2.6)	(14.0)
Maruti Udyog Ltd.	272033	223317	186357	236619	198557	169608	19487	12615	15486
Per cent Share in total	48.1	44.7	45.5	40.1	38.2	39.3	22.4	14.9	20.8
Hyundai Motor India Ltd.	133232	131737	113777	79724	80254	63170	58120	49521	42321
Per cent Share in total	23.5	26.4	27.8	13.5	15.4	14.7	66.9	58.4	56.9
Tata Motors Ltd.	75082	79781	64715	69076	70109	55535	6065	8528	7103
Per cent Share in total	13.3	16.0	15.8	11.7	13.5	12.9	7.0	10.1	9.6
Note: Figures in brackets are percentage variation over the corresponding period of previous year Source: Society of Indian Automobile Manufacturers ( SIAM )

Utility Vehicles (Uvs)

In India , 11 companies manufacture utility vehicles. Of these companies, four companies accounted for about 95 per cent of total utility vehicles production. UV production marked a healthy growth of 9.9 per cent during April-August 2007 as against a modest growth of 0.3 per cent during the comparable period last year.

Table 13: Production, .Sales and Export of Utility Vehicles								(Number)
		Production			Sales			Export
	Apr-Aug	Production	Growth	Share	Sales	Growth	Share
Total Utility Vehicles	2007-08	95759	9.9	100	89480	10.1	100	2868
	2006-07	87109	0.3	100	81268	11.9	100	2338
	2005-06	86854		100	72609		100	1733
Mahindra and Mahindra	2007-08	44774	24.7	46.8	38830	17.2	43.4	1371
	2006-07	35914	8.3	41.2	33121	12.8	40.8	1150
	2005-06	33173		38.2	29362		40.4	1270
Toyota Kirloskar Motor	2007-08	19194	2.3	20	18745	7.1	20.9	0
Pvt. Ltd.	2006-07	18755	-11.7	21.5	17497	-1.5	21.5	0
	2005-06	21235		24.4	17763		24.5	0
Tata Motors Ltd.	2007-08	18109	4.4	18.9	16639	6.8	18.6	1431
	2006-07	17351	31.6	19.9	15576	24.3	19.2	1113
	2005-06	13184		15.2	12530		17.3	395
General Motors India	2007-08	8591	-4.8	9	8175	-2.5	9.1	0
Pvt. Ltd.	2006-07	9023	31.3	10.4	8381	20.7	10.3	0
	2005-06	6870		7.9	6944		9.6	0
Note: Figures in brackets are percentage variation over the corresponding period of Previous year
Source: Society of Indian Automobile Manufacturers ( SIAM )

Mahindra and Mahindra tops in utility vehicles production. The company recorded a substantial increase of 24.7 per cent during the review period as against a rise of 8.3 per cent in the corresponding period last year.. Similar gains in their sales performances were also witnessed. The company exported during the period 1,371 vehicles as against 1,150 units exported last year. The remaining three major players, registered a very modest gains or decline in their production (Table 13).

Multi-Purpose Vehicles

There are only two companies in India which makes multi-purpose vehicles. They are Maruti Udyog Ltd. and Tata Motors Ltd, with the former being the major player.

Their production increased from 30597 units during April-August 2006 to 40,007 during April-August 2007, registering a growth of about 31 per cent of 2007 review period as compared to a growth of 15.4 per cent in the comparable period of 2006. Sales grew by 24.4 per cent during the current fiscal so far as against the increase of 14.6 per cent in the comparable period of 2006-07.

Commercial Vehicles (CVs)

Indian commercial vehicles market is segmented on the basis of gross vehicle weight (GVW) into: 1) Heavy commercial vehicles (HCVs); 2) Medium commercial vehicles (MCVs); and Light Commercial vehicles (LCVs)

The Medium and Heavy commercial vehicles has got gross vehicle weight of more than 7.5 tonnes and includes trucks, buses and multi-axle vehicles. Gross vehicles weight of the Light commercial vehicles is less than 7.5 tonnes and includes small trucks and buses, and special application vehicles.

Table 14 presents the data on production, sales and exports of commercial vehicles during April-August 2007. It can be seen from there that the growth in production of commercial vehicles during the review period declined 3.1 per cent from a high of 33.5 per cent in the previous year mainly due to a fall in the production of medium and heavy vehicles. Production of LCVs grew by 12.0 per cent as compared to 32.9 per cent last year. Similar performance has also witnessed in the case of sales during the review period. However, exports of M & HCVs are satisfactory with about 8,810 units exported during the first 5 month of current fiscal year as compared to 6,580 unit during the same period in the last fiscal year. Export of LCVs during the review period at 13,203 units is 9.2 per cent more than 12,090 units exported last year, lower than the growth witnessed in the previous year.

Table 14: Production, Sales and Export of Commercial Vehicles						(Number)
	April-August			Share in Total
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
1. Production
Total	198711	192776	144373	100.0	100.0	100.0
	(3.1)	(33.5)
M & HCVs	105610	109675	81855	53.1	56.9	56.7
	(-3.7)	(34.0)
LCVs	93101	83101	62518	46.9	43.1	43.3
	(12.0)	(32.9)
2. Sales
Total	169411	163799	118817	100.0	100.0	100.0
	(3.4)	(37.9)
M & HCVs	92474	97500	68930	54.6	59.5	58.0
	(-5.2)	(41.4)
LCVs	76937	66299	49887	45.4	40.5	42.0
	(16.0)	(32.9)
3. Exports
Total	22013	18670	14545	100.0	100.0	100.0
	(17.9)	(28.4)
M & HCVs	8810	6580	4681	40.0	35.2	32.2
	(33.9)	(40.6)
LCVs	13203	12090	9864	60.0	64.8	67.8
	(9.2)	(22.6)
Note: Figures in brackets are percentage variation over the corresponding
corresponding period of previous year.
Source: Society of Indian Automobile Manufacturers ( SIAM )

The production and sales of passenger carriers registered substantial growth of 61.1 per cent and 59.8 per cent respectively, during April-August 2007 as against a growth of 14.6 per cent and 12.2 per cent respectively, during the comparable period of last year in the M & H CVs segments. As against this, goods carriers lost by 11.4 per cent in their production and 12.3 per cent in their sales performances during April-August 2007. However, export of goods carriers was better with 4,823 units exported during the review period as against 3,403 units last year (Table 15).

Table 15 : Performance of Commercial Vehicles by their Use						(Number)
	April-August			April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
	M & HCVs			LCVs
1. Production
Total	105610	109675	81855	93101	83101	62513
	(-3.7)	(34.0)		(12.0)	(32.9)
Passenger Carriers	18778	11656	10173	14892	12942	11795
	(61.1)	(14.6)		(15.1)	(9.7)
Goods carriers	86832	98019	71682	78209	70159	50723
	(-11.4)	(36.7)		(11.5)	(38.3)
2. Sales
Total	92474	97500	68930	76937	66299	49887
	(-5.2)	(41.4)		(16.0)	(32.9)
Passenger Carriers	15442	9663	8613	12621	10176	9465
	(59.8)	(12.2)		(24.0)	(7.5)
Goods carriers	77032	87837	60317	64316	56123	40422
	(-12.3)	(45.6)		(14.6)	(38.8)
3. Exports
Total	8810	6580	4681	13203	12090	9864
	(33.9)	(40.6)		(9.2)	(22.6)
Passenger Carriers	3987	3176	1371	1884	1675	893
	(25.5)	(131.7)		(12.5)	(87.6)
Goods carriers	4823	3403	3310	11319	10415	8971
	(41.7)	(2.8)		(8.7)	(16.1)
Note: Figures in brackets are percentage variation over the
corresponding period of prevuious year.
Source: Society of Indian Automobile Manufacturers ( SIAM )

Table 16 represents the share of major players in the M & H CV segment. In India , there are 5 manufacturers of passenger carriers and 6 players in goods carrier markets. Out of this Ashok Leyland Ltd and Tata Motors Ltd dominate the M & HCV market. However, in 2007-08, the minor commercial vehicles manufacturers such as Eicher Motors and Swaraj Mazda Ltd. have improved their performance.

In addition, in 2007-08, there is considerable increase in the share of passenger carriers segment from 10.6 per cent during April-August 2006 to 17.8 per cent during April-August 2007. Sales grew by 16.7 per cent during the same period 2007 as against 9.9 per cent during the comparable period of 2006. Growth in export decelerated from 48 per cent to 45 per cent in spite of an absolute increase of 810 units during the period under review.

A company wise performance is given in Table 16.

Table 16: Performance of Commercial Vehicles by Manufacturers- Medium and Heavy Commercial Vehicles
	Production			Sales			Export
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
Passenger Carriers	18778	11656	10173	15442	9663	8613	3987	3176	1371
	(17.8)	(10.6)	(12.4)	(16.7)	(9.9)	(12.5)	(45.3)	(48.3)	(29.3)
Ashok Leyland Ltd.	10338	4803	6215	7821	3130	5016	1510	1339	626
	(55.1)	(41.2)	(61.1)	(50.6)	(32.4)	(58.2)	(37.9)	(42.2)	(45.7)
Tata Motors Ltd.	6235	5469	2928	5811	5125	2737	2315	1657	653
	(33.2)	(46.9)	(28.8)	(37.6)	(53.0)	(31.8)	(58.1)	(52.2)	(47.6)
Eicher Motors Ltd.	1130	661	485	862	733	407	111	110	56
	(6.0)	(5.7)	(4.8)	(5.6)	(7.6)	(4.7)	(2.8)	(3.5)	(4.1)
Swaraj Mazda Ltd.	1059	627	359	857	575	294	51	58	11
	(5.6)	(5.4)	(3.5)	(5.5)	(6.0)	(3.4)	(1.3)	(1.8)	(0.8)
Volvo India Pvt.Ltd	16	96	186	91	100	159	0	12	25
	(0.1)	(0.8)	(1.8)	(0.6)	(1.0)	(1.8)	(0.0)	(0.4)	(1.8)
Goods Carriers	86832	98019	71682	77032	87837	60317	4823	3404	3310
	(82.2)	(89.4)	(87.6)	(83.3)	(90.1)	(87.5)	(54.7)	(51.7)	(70.7)
Tata Motors Ltd.	54452	63726	42964	48836	57076	37983	3492	2348	2020
	(62.7)	(65.0)	(59.9)	(63.4)	(65.0)	(63.0)	(72.4)	(69.0)	(61.0)
Ashok Leyland Ltd.	22697	26476	20501	19276	23199	15437	963	950	1044
	(26.1)	(27.0)	(28.6)	(25.0)	(26.4)	(25.6)	(20.0)	(27.9)	(31.5)
Eicher Motors Ltd	7718	6063	5882	6980	5794	4635	227	57	167
	(8.9)	(6.2)	(8.2)	(9.1)	(6.6)	(7.7)	(4.7)	(1.7)	(5.0)
Swaraj Mazda Ltd.	1667	1505	2041	1623	1537	1993	141	49	16
	(1.9)	(1.5)	(2.8)	(2.1)	(1.7)	(3.3)	(2.9)	(1.4)	(0.5)
Volvo India Pvt.Ltd	262	224	225	281	206	204	0	0	63
	(0.3)	(0.2)	(0.3)	(0.4)	(0.2)	(0.3)	(0.0)	(0.0)	(1.9)
Tatra Vectra Motors Ltd.	36	25	65	36	25	65	0	0	0
	(0.0)	(0.0)	(0.1)	(0.0)	(0.0)	(0.1)	(0.0)	(0.0)	(0.0)
M & H CVs	105610	109675	81855	92474	97500	68930	8810	6580	4681
	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)
Note: Figures in brackets under passenger and goods carriers are percentage to total others are percentage to respective segments.
Source: Society of Indian Automobile Manufacturers ( SIAM )

Production and sales of passenger carriers by Ashok Leyland Ltd. witnessed substantial increases during the period followed by Tata Motors Ltd. The performance of smaller players like Eicher Motors and Swaraj Mazda almost doubled in respect of both sales and production.

There are 6 players in goods carrier segment with Tata Motors Ltd. leading the market with a share of about 63 per cent both in sales and production during the review period. Ashok Leyland Ltd occupied second place with about 26 per cent share in production and 25 per cent share in sales during the fiscal 2007-08 so far. Eicher Motors Ltd. with 9 per cent share in production and sales is the third player in this market. However, the over all performance of this sector during the current year is very poor.

Light commercial Vehicles can be classified as goods carriers and passenger carriers on the basis of usage. Goods carrirers, which account for over 80 per cent of LCVs production and sales in India can be segmented into 3 categories on the basis of their gross vehicle weight (GVW). They are (1) less than 3.5 tonnes; (2) 3.5 to 5 tonnes and 5 to 7.5 tonnes.

Production of passenger carriers grew by 15.1 per cent during the first 5 months of fiscal 2007-08 as against a growth of 9.7 per cent during the comparable period last year. On the other hand, production of goods carriers witnessed a slow down during the period to 11.5 per cent in contrast to 38.3 per cent growth witnessed last year. Similar trend has been observed in sales also. Though, there is absolute increase in both passenger and goods carriers export, the rate of growth fell in both cases.

The LCV market has 7 players in the passenger carrier segment and 8 players in the goods carrier segment. In both segments, Tata Motors Ltd is the largest player, commanding a market share of about 50 to 60 per cent in production and sales. Tata Motors Ltd production registered a growth of 5.6 per cent during April-August 2007 as against from 16.7 percent last year in passenger carrier segments. Rate of growth of sales of Tata Motors Ltd. also slipped to 14.7 per cent from 20.1 per cent during the review period and thereby their share in total sales, also marginally dipped.

A distant market player in this segment is Mahindra and Mahindra, .with about 20 per cent to 25 per cent share in both segments as well as production and sales. Mahindra and Mahindra produced 980 more units of passenger carriers as compared to total production of 1974 units during April-August 2006 and increased its production share from 15.3 per cent to 19.8 per cent during the review period.

Table 17: Performance of Commercial Vehicles by Manufacturers- Light Commercial Vehicles
	Production			Sales			Export
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
Passenger Carriers	14892	12942	11798	12621	10176	9465	1884	1675	893
	(16.0)	(15.6)	(18.9)	(16.4)	(15.3)	(19.0)	(14.3)	(13.9)	(9.1)
Tata Motors Ltd.	7703	7296	6152	6002	5231	4360	1595	1437	698
	(51.7)	(56.4)	(52.1)	(47.6)	(51.4)	(46.1)	(84.7)	(85.8)	(78.2)
Mahindra & Mahindra	2954	1974	1438	2642	1587	1547	50	65	57
	(19.8)	(15.3)	(12.2)	(20.9)	(15.6)	(16.3)	(2.7)	(3.9)	(6.4)
Force Motors Ltd	1822	1403	1834	1651	1420	1714	105	67	32
	(12.2)	(10.8)	(15.5)	(13.1)	(14.0)	(18.1)	(5.6)	(4.0)	(3.6)
Eicher Motors Ltd	1167	987	873	1076	787	712	85	105	47
	(7.8)	(7.6)	(7.4)	(8.5)	(7.7)	(7.5)	(4.5)	(6.3)	(5.3)
Swaraj Mazda Ltd.	1025	979	991	1023	914	815	19	1	12
	(6.9)	(7.6)	(8.4)	(8.1)	(9.0)	(8.6)	(1.0)	(0.1)	(1.3)
Ashok Leyland Ltd	200	212	357	187	134	193	30	0	15
	(1.3)	(1.6)	(3.0)	(1.5)	(1.3)	(2.0)	(1.6)	(0.0)	(1.7)
Hindustan Motors Ltd.	15	91	150	40	103	124	0	0	32
	(0.1)	(0.7)	(1.3)	(0.3)	(1.0)	(1.3)	(0.0)	(0.0)	(3.6)
Goods Carriers	78209	70159	50723	64316	56123	40422	11319	10415	8971
	(84.0)	(84.4)	(81.1)	(83.6)	(84.7)	(81.0)	(85.7)	(86.1)	(90.9)
Tata Motors Ltd.	52503	51591	31935	43302	40313	23184	8399	8068	7680
	(67.1)	(73.5)	(63.0)	(67.3)	(71.8)	(57.4)	(74.2)	(77.5)	(85.6)
Mahindra & Mahindra	20774	14205	13762	17306	12174	13085	2458	1820	812
	(26.6)	(20.2)	(27.1)	(26.9)	(21.7)	(32.4)	(21.7)	(17.5)	(9.1)
Force Motors Ltd.	2075	1185	1098	1478	1061	1034	103	87	87
	(2.7)	(1.7)	(2.2)	(2.3)	(1.9)	(2.6)	(0.9)	(0.8)	(1.0)
Eicher Motors Ltd	1444	2160	2038	961	1659	1469	300	325	284
	(1.8)	(3.1)	(4.0)	(1.5)	(3.0)	(3.6)	(2.7)	(3.1)	(3.2)
L CVs	93101	83101	62518	76937	66299	49887	13203	12090	9864
	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)	(100.0)
Note: Figures in brackets under passenger and goods carriers are percentage to total and others are percentage to respective segments.
Source: Society of Indian Automobile Manufacturers ( SIAM )

Third player, Force Motors Ltd., produced 1,822 units of passenger carriers being higher by 419 units over the production achieved last year. However, their shares in sales came down from 14.0 per cent during the first five months of 2006 to 13 per cent in the same period of 2007.

Rate of growth in goods carriers segment achieved by Tata Motors Ltd. during the April-August 2007 at 1.8 per cent was very small as compared to the massive growth of 61.6 per cent in production during the comparable period of previous year which resulted in their shares declining from 73.5 per cent to 67.1 per cent.

Mahindra & Mahindra recorded more than 25 per cent growth both in production and sales during the review period s against 20-21 per cent in the corresponding period of previous year.

Three Wheelers

Three wheelers category divided into two segments, viz., passenger carriers and goods carriers depending upon their use. In this category, passenger carriers are further divided into two according to the number of seats. (1) Number of seats including driver not exceeding 4 and maximum mass not exceeding 1 tonne. (2) Number of seats including driver exceeding 4 but not exceeding 7 and maximum mass not exceeding 1.5 tonne. Goods carriers are also dividend depending upon their mass. (1) Maximum mass not exceeding 1 tonne and (2) Others.

Production of three wheelers registered a decline of 4.2 per cent during April-August 2007 as against a massive increase of 31.8 per cent during April-August 2006. The growth in sales have decelerated to 6.4 per cent during the review period as against an increase of 20.6 per cent during the comparable period of last year. Increase in export halved to 8,014 units during the period as against 17,963 units increase in the comparable period of previous year. In passenger carrier segment, Bajaj Auto Ltd. is the leading player with about 65 to 70 per cent market share in production and sales in passenger carrier segments. They produced 107,826 units of vehicles during April-August 2007 as compared to 109,633 unit during April-August 2006 – less by about 1,800 units. Their sales dipped to 51,829 units from 57,523 during April-August 2006. Export performance, of the company is satisfactory with an export of 55,627 units during the period as against 48,564 units lst year.

The performance of Piaggio vehicles Pvt. Ltd., the second leading player in this segment is better than that of previous year. The company has produced 36,700 units during April-August 2007 as compared to 29,976 units during April-August 2006. Their sales also picked up with sales of 35,148 units in the review period of 2007 as against 30,292 units in 2006.

Table 19: Performance of Three Wheelers
	Production			Sales			Export
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
Passenger Carriers	149633	146717	110273	93208	95051	80050	57450	49279	31132
	72.5	68.2	67.5	62.1	59.2	60.2	99.4	99.0	97.9
Bajaj Auto Ltd.	107826	109633	84421	51899	57523	55243	55627	48564	30841
	72.1	74.7	76.6	55.7	60.5	69.0	96.8	98.5	99.1
Piaggio Vehicles	36700	29976	20164	35148	30292	18891	1675	538	290
	24.5	20.4	18.3	37.7	31.9	23.6	2.9	1.1	0.9
Goods Carriers	56624	68562	53111	56976	65434	52991	329	486	670
	27.5	31.8	32.5	37.9	40.8	39.8	0.6	1.0	2.1
Piaggio Vehicles	26025	26451	20784	25765	26058	21345	196	427	191
	46.0	38.6	39.1	45.2	39.8	40.3	59.6	87.9	28.5
Bajaj Auto	12249	18410	12585	12303	17601	12117	100	0	477
	21.6	26.9	23.7	21.6	26.9	22.9	30.4	0.0	71.2
Mahindra & Mahindra	12886	13420	5849	12552	11076	5939	15	0	0
	22.8	19.6	11.0	22.0	16.9	11.2	4.6	0.0	0.0
Three Wheelers	206257	215279	163384	150184	160485	133041	57779	49765	31802
	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0
Note: Figures in brackets under passenger and goods carriers are percentage to total and others are
Percentages to respective segments total.
Source: Society of Indian Automobile Manufacturers ( SIAM )

Two Wheelers

Two wheelers have three main product segments, viz., scooters ,motor cycles and mopeds. Recently another product known as electric two wheeler is in the market. Scooters and motorcycles are further classified according to engine capacity. Scooter is categorised as (1) Engine capacity less than 75 cc, (2) Engine capacity of 75 cc and above but less than 125 cc and (3) Engine capacity 125 cc and above but less than 250 cc. Similarly, motorcycles are divided into (1) Engine capacity of 75 cc and above but less than 125 cc , and (2) Engine capacity of 125 cc and above but less than 250 cc. Mopeds usually have an engine capacity less than 75 cc with fixed transmission and with big wheel size more than 12”.

Table 20: Performance of Two Wheeler Industry								(Numbers)
	Production			Sales			Export
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06	2007-08	2006-07	2005-06
Two Wheelers	3168000	3361441	2860313	2785561	3045091	2648404	344017	276161	214419
	(-5.8)	(17.5)		(-8.5)	(15.0)		(24.6)	(28.8)
Scooter/Scooterettee	440730	357441	384150	435164	366036	351157	11750	21575	40878
	(23.3)	(-7.0)		(18.9)	(4.2)		(-45.5)	(-47.2)
Motor Cycles/	2539395	2850842	2324753	2172474	2536668	2165577	321321	237103	153809
Step-Through	(-10.9)	(22.6)		(-14.4)	(17.1)		(35.5)	(54.2)
Mopeds	181878	146861	151410	171125	136551	131670	10941	17483	19732
	(23.8)	(-3.0)		(25.3)	(3.7)		(-37.4)	(-11.4)
Electric Two Wheelers	5997	6297	-	6798	5836	-	0	0	-
	(-4.8)			(16.5)
Note ‘ – ‘ Not relevant
Figures in brackets are percentage increase over the previous year.
Source: Society Of Indian Automobile Manufacturers ( SIAM )

During the first five months of fiscal year 2007-08, production of Two wheelers’ declined by 5.8 per cent as compared to an increase of 17.5 per cent during the comparable period of 2006-07. While the production of scooters/scooterettee (23.3 per cent) and moped (23.8 percent) registered rise , that of motorcycles declined by 10.9 per cent during the review period this year (Table 20).

Sales of Two wheelers in the domestic market also decreased by 8.5 per cent during April-August 2007 as against a rise of 15.0 per cent during the same period of 2006. Motorcycle sales dipped by 14.4 per cent during the review period as against an increase of 17.1 per cent during the last comparable period. Substantial increases in the sales of Scooter (18.9 per cent) and mopeds (25.3 per cent) took place during the period April-August 2007.

The volume of export of two wheelers during the current review period at 344,017 was higher by 67,856 units than the volume of export achieved in the corresponding period of last year. While exports of scooters and mopeds declined that of motorcycles had increased.

Table 21: Company-wise Performance – Two wheelers
	April-August
	2007-08	2006-07	2005-06	2007-08	2006-07	2007-08	2006-07	2005-06
	Number			Growth in %		Share in Per cent
Production
Two Wheelers	3168000	3361441	2860313	-5.8	17.5	100.0	100.0	100.0
Hero Honda Motors Ltd.	1301632	1317781	1166515	-1.2	13.0	41.1	39.2	40.8
Bajaj Auto Ltd.	842599	933607	745437	-9.7	25.2	26.6	27.8	26.1
TVS Motor Company Ltd.	509838	616080	511816	-17.2	20.4	16.1	18.3	17.9
Honda Motorcycle & Scooters India	371805	265588	212194	40.0	25.2	11.7	7.9	7.4
Yamaha Motor India Ltd.	69806	145952	89969	-52.2	62.2	2.2	4.3	3.1
Suzuki Motorcycle India (p) Ltd.	21623	26723	0	-19.1		0.7	0.8	0.0
Kinetic Motor Company Ltd.	21590	26191	60170	-17.6	-56.5	0.7	0.8	2.1
Royal Enfield	15253	12542	12254	21.6	2.4	0.5	0.4	0.4
Majestic Auto Ltd.	7857	10680	25966	-26.4	-58.9	0.2	0.3	0.9
Electro Therm ( India ) Ltd.	5997	6297	NA	-4.8		0.2	0.2
Sales
Two Wheelers	2785561	3045091	2648404	-8.5	15.0	100.0	100.0	100.0
Hero Honda Motors Ltd.	1208963	1234283	1119280	-2.1	10.3	43.4	40.5	42.3
Bajaj Auto Ltd.	629012	806932	686431	-22.0	17.6	22.6	26.5	25.9
TVS Motor Company Ltd.	478669	586164	476244	-18.3	23.1	17.2	19.2	18.0
Honda Motorcycle & Scooters India	356496	250946	190678	42.1	31.6	12.8	8.2	7.2
Yamaha Motor India Ltd.	45012	96950	74355	-53.6	30.4	1.6	3.2	2.8
Suzuki Motorcycle India (p) Ltd.	24283	19023	0	27.7		0.9	0.6	0.0
Kinetic Motor Company Ltd.	19831	31775	56120	-37.6	-43.4	0.7	1.0	2.1
Royal Enfield	13283	11508	10759	15.4	7.0	0.5	0.4	0.4
Majestic Auto Ltd.	3214	1674	12073	92.0	-86.1	0.1	0.1	0.5
Electro Therm ( India ) Ltd.	6798	5836	0	16.5		0.2	0.2	0.0
Note: Latest data for LML Limited is not available, however total for all two wheelers includes LML limited.
Source: Society of Indian Automobile Industry.

Table 21 depicts the performance of two wheeler manufacturers. Although, there are 11 players in two wheel market, four major players accounted for about 95-96 per cent of the market both in sales and production.

Majority of the companies witnessed decline in their production and sales, including the topmost players of the market viz., Hero Honda Motors Ltd., whose share was more than 40 per cent during April-August 2007. Substantial fall in production and sales of Bajaj Auto Ltd., pulled down their shares during April-August 2007. TVS Motor company also exhibited a falling trend in their production and shares.

Unlike the above three leading players, Honda Motorcycle and Scooters India Ltd., performance during the five month period of 2007-08 was exemplary. Companies production during the current review period rose by 40 per cent and sales by 42.1 per cent mainly because of the performance of their motorcycle with engine capacity 125 cc and above but less than 250 cc and scooters with engine capacity 75 cc and above but less than 125 cc. Production in this segment motorcycle witnessed an increase of 52,010 units during the first five month of 2007-08 and their sales volume gone up to 98,423, an addition of 41,179 unit to that achieved in the corresponding period of 2006.

As per the data reiterated from port-wide, exports of casein have increased by six fold even though; central government has banned exports of skimmed milk powder (SMP). It is projected that around 8,366 tonnes of casein has been exported during February-July 2007,with exports standing at 1,615 tonnes in February, 1,584 tonnes in March, 1,742 tonnes in April, 1,185 tonnes in May, 999 tonnes in June and 1,241 tonnes in July. This shows that corresponding average milk consumption during this period in the country have been declined to 13.330 lakh litres per day (LLPD) which would have been more if the average consumption of over 16 lakh litres per day (LLPD) wouldn’t have been utilised for the manufacturing of casein over the same period.

According to Gujarat Civil Supplies Department, Ahmedabad-based Vimal Oil & Foods is planning to introduce 400 tonnes of niger seed oil by January 2008; it is considered as one of the new entrant in the Indian edible oil market. This product would be named as ‘Nirogi’ or ‘Aayushya’. Introduction of this product in the country would have very niche market, as being low fat oil, it has a potential to attract more number of consumers. People utilising it would be more and more health conscious.

State Trading Corporation of India (STC) has planned to enter into commodity market, by undertaking online trading of commodities through the channel of leading commodity exchange NCDEX. The corporation is expected to commence trading on commodities like wheat, urad and tur, which has been banned by the central government.

High prices recorded for wheat and corn across the world would lead various countries to shift their demand for livestock feeding towards alternative feedmeal like oilseed meal. Hence, the demand for oilseed meal would increase in excess (75 per cent) by next year. It is expected that, it would increase to 268.6 million tonnes by September 30, 2008, from a likely 256.32 million tonnes corresponding to this year. Under which, soybean meal demand would rise by 6 per cent to 166 million tonnes.

According to the Central Organisation of Oil Industry and Trade, soyabean output is likely to go up to 8.6 million tonnes (oil year) as against that of 7.66 million tonnes last year, while groundnut production is estimated to be 4.6 million tonnes as compared to 3.5 million tonnes a year ago. While, industry has pegged that the oilseeds output would increase by 15.15 million tonnes in 2007-08, as against that of 13.15 million tonnes in the previous year, all these estimations are undertaken on the basis of first advance estimate released by the Agriculture Ministry, which has projected that oilseeds production is likely to increase by about 16 per cent at 16.13 million tonnes in kharif season 2007, as compared to that of 13.94 million tonnes in the corresponding period a year-ago. Groundnut production is pegged at 5.18 million tonnes, while soyabean production is estimated to be 9.04 million tonnes.

Central government, is trying its best, in order to maintain the price of wheat, untill new crop doesn’t enter into the market, so it has decided that the country would extend the duty-free import of wheat beyond December 2007 for private traders, consequently it would lead to increase the domestic supply of the commodity, as it has not taken any move against the wheat products such as wheat flour and maida. It is expected that country would achieve wheat production of 74.89 million tonnes this year, while target of over 75 million tonnes would be set up for the next season. Currently, wheat price in the normal market is ruling in the range of Rs 1,010-1,020 per quintal.

Demand for turmeric has increased tremendously due to occasions of festivals going on in the country, though the new crop is still four months away. It is attributed that consumption of turmeric is around 47-48 lakh bags per year. Initially estimates undertaken have illustrated that the crop size would be 45 lakh bags (each of 75 kg) during 2007-08, which is down nearly by 14 per cent as against that of last year’s 52 lakh bags. Low price realisation is attributed to range between Rs 1,700 and Rs 2,000 per quintal, as there is decline in the crop acreage by around 25 per cent. According to the traders, it is expected that output would be nearly around 42 lakh bags this season, along with a carry-forward stock of 13 lakh bags in January 2008, out of which stockists are expected to spot around 5 lakh bags, while remaining stocks, i.e., 7-8 lakh bags would not be sufficient for the period January-March 2008, but by that time new arrivals would enter the market.

Coir products exported from the country have increased tremendously to an all-time high of 1, 65,097 tonnes, valued at Rs 595.22 crore, in 2006-07 as against that of 1, 36,027 tonnes, valued at Rs 508.45 crore in 2005-06. It is estimated that coir exports would continue to be at good pace during this year, despite the production being hit due to workers affected by chikungunya.

Marine Products Export Development Authority (MPEDA) has planned to set up a body for ensuring quality of fish known as Network for Fish Quality Management and Sustainable Fishing (NETFISH), which would be implemented since from October 1 2007. Introduction of this organisation would evolve a new mechanism for capacity building and quality management at the grass roots level by networking with fishermen. Under this plan agency would be created which would be more effective in imparting training to fishermen and fish workers, about the initial stages of the quality chain and final stages of post-harvest handling.

Central Marine Fisheries Research Institute in Visakhapatnam have formulated a floating farm cage for culturing marine fish, which have been released into the sea on 29^th September 2007. It has been expected that around 12,000 to 15,000 fish would be cultured inside this cage, which is anchored at a distance of 100 meters away from the coastline.

According to East India Cotton Association (EICA), India has overtaken US as the second-largest cotton producer in the world for the 2006-07 seasons, and it is expected that it would retain its position in the next season starting from October 2007. The rise in cotton production in India has increased due to introduction of Bt cotton, because of which cotton yield has gone up by 65 per cent since 2003 from around 302 kg per hectare during 2002-03, which shows that it has slid upwards by 518 kg this season. Bt cotton’s contribution to the total production in this season is estimated to be at 40 per cent and for the coming season, it would be 55 per cent. Indian production this season (October 2006-September 2007) is estimated to be 280 lakh bales of 170 kg as against that of 245 lakh bales in the corresponding period of last season and for the next season it has been projected to be minimum about 300 lakh bales. Area wise, India has topped this year, i.e., about 90 lakh hectares is under cotton cultivation, while during in next season it is projected to be around 95 lakh hectares. China is likely to have 57 lakh hectares under cotton cultivation, while US would have 42 lakh hectares.

The government of Indonesia has increased the base price of palm oil by 3.7 per cent, i.e., from US $ 733 per tonne to US $ 760 per tonne, as it would be beneficial for calculating tax on exports of the commodity, while the tax rate of crude palm oil has been set to 7.5 per cent. This would be implemented since from October 1 2008, and would be effective upto month end.

As per the data reiterated by Tea Board, tea exports have witnessed a decline this year mainly on account of lower purchases undertaken by countries like Iraq and Pakistan . Total exports during January-July 2007 have declined to 86 million kgs (mkg) from 106.6 million kgs (mkg) as per corresponding period a year ago. It has been estimated that export would be targeted to 206 million kgs (mkg) in 2007 as against that of last year’s actual shipments of 203 million kgs (mkg), but the industry is doubtful in achieving the target, given the current trend. With in the first half of this year exports of tea to Iraq have witnessed a sharp decline from 3.35 million kgs (mkg) to 20 million kgs (mkg), consequently Pakistan has also imported less of Indian tea due to which shipments have declined to 2.21 million kgs mkg from 5.79 million kgs (mkg). While, total earnings from the exports have also dropped from Rs 16.45 crore to Rs 11.39 crore, exports to Iraq have been undertaken at Rs 51.40 per kg in 2007 as against that of Rs 51.54 per kg last year and shipments to Pakistan have been at Rs 51.53 per kg against Rs 48.08 per kg.

Inflation

The annual point-to-point inflation rate based on wholesale price index (WPI) declined to 3.23 percent for the week ended September 15,2007. During the comparable week of the earlier year, it was 5.27 per cent.

During the week under review, the WPI declined by 0.1 per cent to 214.4 from 214.7 at the previous weeks’ level (Base: 1993-94=100). The index of ‘primary articles’ group, (weight 22.02 per cent), declined by 0.7 percent to 226.4 from its previous week’s level of 227.9, mainly due to lower prices of fruits and vegetables, fish, eggs, moong,urad and maize.

The index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) rose by 0.1 per cent to 322.0 from 321.7, because of the higher prices of furnace oil.

The index of ‘manufactured products’ group remained uncangedat its previous week’s level of 186.2.

The latest final index of WPI for the week ended July 21, 2007 has undergone upward revision; as a result, both the absolute index and the implied inflation rate stood at 213.7 and 4.65 per cent as against the provisional data of 213.1 and 4.36 per cent.

Banking

State Bank of India has announced a cut in home loan rates by 75 basis points, from 11.25 per cent to 10.50 per cent.

Bank of Baroda has opened a representative office in Sydney while ICICI Bank has launched its operations in Bahrain as an offshore banking unit.

Financial Sector

Reliance Power, a subsidiary of Anil Ambani led Reliance Energy Ltd (REL), will soon tap the market to raise the highest ever amount of Rs. 12,000 crore, which could be considered to be India’s largest ever initial public offer.

Maytas Infra Ltd, a construction and infrastructure development company, is entering the capital market with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process. The issue will open for subscription on September 27 and will close on October 4. The company has fixed the price band between Rs 320 and Rs 370 per equity share.

ECE Industries Ltd, a company in the business of power technology, made its debut on the NSE at a premium of 18.67 per cent against the offer price of Rs 589 at Rs 699. It has already been listed on the BSE earlier and closed at Rs 632.25 on Monday September 24.

Emaar MGF Land (a joint venture between Dubai based real estate giant Emaar Properties PJSC and MGF Development Ltd), proposing a public issue of about 117 million equity shares of Rs 10 each for cash at a price to be determined through a 100 per cent book building issue already filed a draft red herring prospectus with market regulator Sebi. The shares of the company are proposed to be listed on the BSE and the NSE.

Governments aim to bring in more transparency and efficiency in share sale an auction based method for pricing of IPO’s may replace book- building as Sebi’s primary market advisory committee, has been asked to prepare a discussion paper on various price discovery mechanisms.

The BSE Sensitive Index shot up to a historical 17,000 mark on September 26, exactly within one week, that is, five trading sessions after it breached the 16,000 mark, making for the fastest 1,000-point gain in its history. It also recorded its longest ever, non-stop climb of 1645 points in just eight trading sessions between September 17 and September 27. The S&P CNX Nifty too has increased by a record 500 points in just 53 sessions. During the week, BSE sensex ended 5 per cent up at 17291 points and Nifty gained 4 per cent and closed at 5021 points following expectations of further rate cut by US fed. Investors world over gave a euphoric welcome to the 50 basis points cut in interest rates by the US Federal Reserve in response to the credit crunch and interpreted it as a proactive step towards avoiding a recession. The emerging markets like Hong Kong , India and Brazil have gained more than the developed markets because of huge inflows of FII’s money. As India , one of the emerging markets in India has seen FII’s pumping in $2140.8 million in seven days ending September 26.Asian markets especially China and India have been re-rated after Fed rate cut, which has resulted in a shift in investments among various global asset classes. Indian economy and corporate profits have exhibited robust growth even during challenging times of rising interest rate cycle which started from 2003 onwards.

All the BSE Sectoral indices rose over the week with the highest increase in BSE- Metal of 8.84 per cent due to supply issues and subsequent high prices of these commodities, followed by the BSE Bankex 8.35 per cent, BSE PSU 5.41 per cent and CNX IT 4.35 per cent.

The stock market regulator Securities and Exchange Board of India (Sebi), has issued notices against 20 large companies that have not complied with corporate governance regulations in the past two weeks. Sebi wants to send a signal that it has control over markets and do not want any untoward incident happening in the market.

Panasonic AVC Networks India Company Ltd has decided to delist its shares from the stock exchange, through a reverse book building at an indicative price of Rs 18, which is based on the Sebi formula, at a premium of 27.09 per cent compared to Rs 14.16, which is the floor price. Investors can exit from this company either by tendering in the open offer, which is open from September 24 to September 28, or by selling in the open market during the week. The Matsushita Electric Industrial Company of Japan , which holds 55 per cent of the equity, promotes the company and its Indian counterpart holds 27.74 per cent.

In a bid to ease the pressure of forex inflows in the wake of the rate cut by the US Fed, on September 25 the Reserve Bank of India allowed Indian companies to invest more funds overseas without its prior permission. RBI would now allow higher limits for corporates in direct and portfolio investments besides pre-payment of external commercial borrowings. Individuals have been permitted to remit up to $2 lakh per annum ($1 lakh earlier). Indian companies can now invest in joint ventures or their wholly owned subsidiaries overseas up to 400 per cent of their net worth under the automatic route as against 300 per cent now. The enhanced limit will also be available to registered partnership firms. The limit of portfolio investment abroad by Indian listed companies has been increased from 35 per cent of the net worth of listed Indian companies to 50 per cent. RBI has also done away with the requirement of 10 per cent reciprocal share holding in the listed Indian companies by overseas companies for the purpose of portfolio investment abroad by Indian listed companies. The existing limit for prepayment of ECBs without the RBI approval has been increased from $400 million to $500 million, subject to compliance with the minimum average maturity period as applicable to the loan. The aggregate ceiling for overseas investments by mutual funds, registered with Sebi, has been raised from $4 billion to $5 billion. In addition, the existing facility of investing up to $1 billion in overseas Exchange Traded Funds, as may be permitted by Sebi by a limited number of qualified Indian mutual funds, would continue. The existing limit under Liberalised Remittance Scheme has been enhanced from $100,000 to $200,000 per financial year.

The Securities and Exchange Board of India (Sebi) has expanded the scope for investment by Indian Mutual Funds limit to encourage more mutual funds to offshore schemes from $200 million to $300million, following the foreign investment relaxation announced by the RBI. The new categories of instruments include ADRs/GDRs issued by foreign companies, initial and follow-on public offerings, foreign debt securities in the countries with fully convertible currencies, money market instruments, government securities of countries, which are rated not below investment grade. Other instruments include derivatives traded on recognised stock exchanges overseas only for hedging and portfolio balancing with underlying as securities, short-term deposits with banks overseas where the issuer is rated not below investment grade, units/securities issued by overseas mutual funds registered with overseas regulators and investing in approved securities of Real Estate Investment Trusts listed in recognised stock exchanges overseas or unlisted overseas securities which are less than 10 per cent of their net assets.

The nifty closed at 5021 in spot with October futures settled at 5037 and November futures at 5026. A premium in the nifty futures is unusual at this early stage in a settlement and differential is tough to exploit directly. The difference between October- November futures is of normal dimensions and likely to remain at those levels. This is comparatively a short settlement so arbitrage opportunities could come up by the third week of October.

On September 26, 2007, RBI conducted the auctions of 91 day and 364 day T- bills for the notified amounts of Rs.3500 crore (out of which Rs.3000 crore under MSS) and Rs.3000 crore (out of which Rs.2000 crore under MSS) respectively. The cut-off yields for 91 day T-bills and 364-day T- bills were 7.1858 per cent and 7.5012 per cent respectively.

RBI conducted the auctions of 5.87 per cent 2010 and 5.48 per cent 2009 for Rs.5,000 crore each. Both the auctions conducted on September 26, 2007 under the Market Stabilisation Scheme (MSS), through a price-based auction using multiple price method. The cut-off yields were 7.3606 per cent and 7.7887 per cent respectively.

During the week, call rates ruled lower in the range of 3-3.5 per cent against 7.5-7.8 per cent, however, on the reporting Friday, the rate jumped to 9-9.50 per cent as demand for funds increased before half-yearly book closure of banks but gradually the demand cooled off after banks covered their positions. Also

In spite of comfortable liquidity, yield on 10-year benchmark 7.99 per cent 2017 surged to 3-week high of 7.91 per cent from 7.85 per cent due to emerging liquidity concerns arising out of advance tax outflows and upcoming bond sales and also apprehensions of RBI mopping up funds through MSS issuances.

In US, according to government bond traders, who predicted six of the last seven recessions, the Fed reserves would cut the interest rates before the end of the year.

ICICI Bank plans to sell dollar denominated bonds and seeking to price the bonds to yield about 2.375 percentage points more than Treasuries of similar maturity.

The rupee zoomed from 39.91 to 39.62 per dollar setting fresh 9-year highs due to broad dollar weakening. Later half of the week rupee consolidated around 39.90 per dollar on suspected bids by state-run banks to curb appreciation and closed at 39.85 after short covering spree by traders and maintained a gap of 5 paise. A surge in stocks along with hefty FII inflows propelled the rupee higher however state run banks intervened in the market to arrest the appreciation.

Total turnover in commodity derivatives on the 3 national exchanges and 21 regional exchanges during September 1-15 was down 27 per cent on year at Rs 1.3 trillion according Forward Markets Commission. The cumulative turnover for the current financial year till September 15 stood at Rs 16.13 trillion down by 7 per cent on year.

Ahmedabad based National Multi Commodity Exchange (NMCE) has initiated the process to sell 26 per cent stake BSE through issue of fresh equity after receiving commodity market regulator FMC’s nod. BSE’s stake in NMCE would become the highest after the sale process becomes completed as NSE has 15 per cent stake at NCDEX.

National Commodity and Derivative Exchange will form a company within 3-4 weeks along with six other firms including National Thermal Power Corporation and Power Finance Corporation and National Hydroelectric Power corporation, for its proposed power exchanges as directed by sectoral regulator Central Electricity Regulatory Commission. PowerGrid Corp, NSE, Tata power, NTPC, NHPC and PFC along with the commodity exchange would hold almost equal stake in the proposed firm.

Barley futures taking new highs because of incessant export demand as the October contract breached Rs 1,200 a quintal on 25 September. Maize too closed at Rs 736 a quintal in spite of appreciations of the crop damage due to rains during the harvest season.

The Directorate General of Foreign Trade (DGFT) has lifted the ban on the import of edible oil extracted from genetically modified oilseeds. The move allows import licence holders, under the Duty- Free Entitlement Certificate (DFEC) scheme for Target Plus and Status Plus schemes, to freely import edible oil derived from GM oil seeds.

Contrary to general belief that India is a market only for low-end cellular phones, world leader Nokia said that the country is among the top 10 nations using smart phones offering mobile internet ideal for corporate and business professionals.

Corporate Sector

The rupee appreciation is proving to be a boon for major domestic steel manufacturers as importing manufacturing equipments works out to be cheaper for the capacity expansion programme.

National Aluminum Company Ltd (NALCO), the country’s second-biggest producer of aluminum, plans to raise about €150 million (nearly Rs 900 crore) of overseas debt to finance the second phase of its expansion programme.

Insurance

In order to penetrate the growing Indian market for the insurance sector, Max New York Life Insurance is opening 90 offices in the country and will be increasing the strength of its insurance advisors by 7,000 during this year.

Bharti Airtel has received the licence to launch direct-to-home (DTH) services in the country. In the first phase the company will be investing around Rs 150 crore on infrastructure in collaboration with Tendberg Television, a subsidiary of Swedish telecom equipment major Ericsson.

*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project.