Two Wheeler OEMs much profitable than Car OEMS!

While the cost of a passenger car is much higher than a 2-wheeler; the Bike/Scooter OEMs have surpassed the Car OEMs by a decent margin. We have always been amazed by the dynamics of the Automotive Industry and this business performance dazzles us even more. There is a tremendous influx of Global Passenger Car OEMs in the Indian Automotive Space, but many of the existing companies are suffering with tremendous losses. And the way forward for the incoming companies is not easy either.

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Source: Business Standard

Car OEMs considered for the above calculation – Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai Motors India, Honda Cars India, Toyota Kirloskar and Ford India.

2-wheeler OEMs considered – Hero MotoCorp, Bajaj Auto, TVS Motors, Eicher Motors and Honda Motorcycle & Scooters India.

Majority of the Two-wheeler OEMs debts are under control and have a healthy balance sheet. Whereas, the debt levels of Car OEMs are mind-boggingly high. It is also attributed by extremely high investments made by carmakers in setting up the manufacturing facility and exorbitantly high New Product Development costs.

Amongst all automotive companies (4-wheelers), only Maruti Suzuki seems to be in a financially strong position. Also with The Indian Policy makers penalizing the car buyers with hefty taxes, the automotive space is under tremendous pressure to perform. These are the following taxes that a car buyer has to bear as of date –

  • Excise Duty
  • Central Sales Tax (CST)
  • R&D Cess
  • Education Cess
  • Value Added Tax (VAT)
  • Octroi/Entry Tax
  • National Calamity Contingent Duty
  • Road Tax
  • Swachh Bharat Cess
  • Service Tax

Apart from these taxes, from 1st June the customer needs to pay additional 1% as Krishi Kalyan Tax (for cars >Rs.10 Lakhs)! So, while the Modi Government is pushing for Make in India we believe that not much adequate steps are being taken to support the OEMs.

Two Wheelers Export Data – FY16

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OEM & Model-wise Export Volumes

*FY16 – April 2015 to March 2016

Top Export Models from India –

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Best Performers!
  • Bajaj outperforms others by a huge margin! It has 6 products in the Top 10 list. Also be surprised to see Boxer as the Top Exported Model!!! Africa, Argentina, Mexico, Columbia are some of the key markets for Bajaj. Boxer is the largest selling single brand  for Bajaj in Africa!
  • Also notable is TVS’s performance in exports – Star City & Apache has considerable volumes outside the subcontinent.
  • Hero’s performance has been dismal in exports. However, the scooters are performing well in exports for Hero vis-a-vis motorcycles.

Cars Export Data – FY16

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Top Export Models for FY16

*FY16 – April 2015 to March 2016

  • OEMs such as Ford, Volkswagen, Nissan and GM show tremendous focus on exports – Infact, their export volumes are higher than domestic sales volume!
  • But Maruti & Hyundai are not leaving this space as well – While Alto’s exports is growing strong; Baleno was the first model to be exported to mother country (Japan)!
  • And Hyundai lists in 4 models out of Top 10 exported models!

World Cars Sales Trend!

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Passenger Car Sales Data for the Top Countries

 

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How things have changed in past 10 years!

Snippets:

World Passenger car Sales grew by 46.6% when 2015 is compared to 2005. Volumes stand at 6.63 Crore.

  • India grew by 150.5%  when CY2015 is compared to CY2005. Volumes stand at 27.7 lakhs in CY2015 – Ranked at 5th in the world. Contribution into World Sales – Just 4.18%.
  • China grew by 432.5%  when CY2015 is compared to CY2005. Volumes stand at 211.4 lakhs in CY2015 – Ranked at 1st in the world. Contribution into World Sales – Just 31.89%.
  • USA grew by -1.1%  when CY2015 is compared to CY2005. Volumes stand at 75.7 lakhs in CY2015 – Ranked at 2nd  in the world. Contribution into World Sales – Just 11.42%.
  • Japan grew by -11.2%  when CY2015 is compared to CY2005. Volumes stand at 42.1 lakhs in CY2015 – Ranked at 3rd in the world. Contribution into World Sales – Just 6.36%.
  • Germany grew by -3.4%  when CY2015 is compared to CY2005. Volumes stand at 32.0 lakhs in CY2015 – Ranked at 4th in the world. Contribution into World Sales – Just 4.83%.

 The other 5 in the Top 10 are UK, Brazil, France, Italy & South Korea.

 These in the Top 10 contribute to 73.44% of World Sales. While the above list of Top 21 contribute to 86.71% of World Sales.

 Our Next Topic is on – Why is India the Brightspot???

Source: OICA