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Home / India News / 2007 / February / February 19, 2007
Frost & Sullivan Expects Passenger Vehicle Sales Volume to Reach 2.1 Million by 2010

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Frost & Sullivan Expects Passenger Vehicle Sales Volume to Reach 2.1 Million by 2010

Mumbai, Maharashtra, India

Frost & Sullivan estimates Passenger Vehicles sales to grow at a CAGR of 14.9 percent over the forecast period of 2005-06 to 2009-10 with sales volume expected to reach 2.1 million by 2010. Global passenger vehicle production trends show stagnation of Europe, Japan and the US markets, indicating potential for Asia, with India expected to add a million passenger vehicle production capacity by 2010. Over capacity in China and near stagnating sales in South Korea confirm that India could see the next round of investment in capacity addition.

To recognize the potential of the Indian Automotive sector, Frost & Sullivan hosted "Indian Automotive Outlook 2007" - an evening that delivered knowledge and explored the next generation technology leap that the auto industry could witness.

"India is already moving towards becoming an export hub for small cars and is the 4th largest car market in Asia. Interestingly, India has the lowest car penetration rate of 8.5 (per 1000 population) when compared to select developing countries such as Malaysia, Mexico, Brazil, Thailand, China, Sri Lanka, Indonesia and the Philippines, demonstrating the high potential that the Indian market has to offer", says Anand Rangachary, Managing Director, South Asia and Middle East, Frost and Sullivan.

Currently, A2 and A3 segments represent 70percent of the entire market pie. Companies like Maruti Udyog Limited (41.4 percent), Tata Motors (16.2 percent) and Hyundai (12.9 percent) clearly dominate and account for 71 percent of the Indian passenger cars market. They along with GM, Mahindra, Renault and Volkswagen would largely contribute to expansion in capacity as well. Frost & Sullivan anticipates total industry capacity to grow from 1.6 million units in 2006 to 2.9 million in 2010.

Frost & Sullivan analysis also indicated that if the pace of economy continues to be as robust as it is at present, the commercial vehicles market is expected to grow at a CAGR of 27 percent with volumes expected to touch approximately 900,000 units by 2010. Two wheelers market on the other hand is expected to record 10.1 million by 2010 with motorcycles continuing to account for 80-85 percent of the demand.

Speaking on the Indian Auto components production scenario, V.G. Ramakrishnan, Director, Automotive and Transportation Practice, Frost & Sullivan, said, "The auto components industry production has the potential to grow at a CAGR of 17.3 percent over 2006-2010 and reach $23.2 billion by 2010. This growth will be due to strong Original Equipment and aftermarket demand in India and increased growth of embedded components in vehicle and direct exports. Global companies are not only increasing their component sourcing from India; they are also keen to take part in the Indian software industry through direct development. Frost & Sullivan analysis suggests that exports of auto components is estimated to reach $5.8 billion by 2010 and would account for 25 percent of the total production in 2010 compared to 17.4 percent in 2005 -06."

The new vehicle market besides, moving to a higher level with growing numbers is also witnessing significantly improved build quality and increased usage of technology. In-vehicle networking technology usage will be common in all vehicles produced by 2010 as the electronics content is increasing. As India produces global models that are exported many features like Anti-lock braking system, electric power steering, air bags could become standard fitment in many vehicles along with advanced fuel management systems.

The Indian Automotive Outlook 2007 was combined with Frost & Sullivan announcing the award recipients of its "Voice of Customer Awards" in three categories, namely, Best Passenger Vehicle Finance Company in India which was awarded to Kotak Mahindra Prime; Best Auto Fuel Brand in India, which was presented to Bharat Petroleum Corporation Limited; and Best International Logistics Service Provider in India, which was conferred to DHL.

For the first two categories - Passenger Vehicle Finance Company and Auto Fuel Brand in India, research involving a sample size of 5,100 vehicle owners (a mix of utility vehicles and passenger cars) with vehicle age less than five years spanning across 15 major cities in India was conducted.

Prior to this, a dipstick study was conducted among vehicle owners to identify performance metrics that determine their preferences and decision of using a particular service provider. These metrics were then verified and validated with reference to current business practices with select industry experts. Two specific segments were identified from the dynamic automotive industry, namely, vehicle financing and fuel retailing.

The sample size of 5,100 vehicle owners then evaluated the industry participants' performance metrics in these two segments individually to provide ratings on a 7 point scale, with 7 indicating the maximum score reflecting "highly satisfied" with the product or service and 1 indicating the least score reflecting "highly dissatisfied" with their experience.

Ratings from the sample were analysed and the top achiever was selected on the basis of maximum score obtained on each of the parameters with corresponding weightage given to overall performance. The award recipient was chosen from those companies that had an active portfolio in the market.

For Best International Logistics Service Provider in India, Frost & Sullivan conducted interviews with logistics managers of over 480 companies across eight industry verticals namely automotive, auto components, FMCG, Consumer durables, retail, textiles, pharmaceuticals and IT and Telecom. Logistics managers across the verticals identified top hygiene factors impacting supply chain and rated each of the service providers managing their global logistics on these metrics. Frost & Sullivan developed a four quadrant matrix of these metrics using AHP statistical tools and the award recipient was chosen based on the position of the company in each of the quadrants leading to an overall score.

According to V.G. Ramakrishnan, "Frost & Sullivan - Voice of Customer Awards endeavor to provide a good benchmark for companies in the ecosystem to bring in improvements to overall structure and upgrade the systems to meet ever-changing customer dynamics."

About Frost & Sullivan:

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 45 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com

Nimisha Iyer, Corporate Communications - India, Frost & Sullivan, + 91 (022) 4001 3400 niyer@frost.com

Ravinder Kaur, Corporate Communications - India, Frost & Sullivan, + 91 (044) 4204 4515 ravinder.kaur@frost.com

Source: Frost & Sullivan (Business Wire India)

Press release presented here is sourced from the Source mentioned above and is provided on as-is basis. Please contact the Company / Source directly for any further information in regard to this release. This website will be unable to assist you in regard to the accuracy or correctness of information in this release.

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