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

Journey from Hero Honda to Hero v/s Honda

In 1984, Hero Cycles graduated from a Bicycle maker to a Motorcycle manufacturer by collaborating with Honda Motor Company Ltd of Japan. The first product post the collaboration agreement was launched in 1985 – named Hero Honda CD100. The rest we can say was history – By 2001, Hero Honda grew to be the world’s largest 2 wheeler company! The association churned many such milestones in the Indian market and became a household name pretty quickly. Like every marriage, this association had some bitter experiences in between and later could simply not cope up with the increasing differences. While Hero wanted to taste a bit of exports market and strengthen its inhouse R&D; Honda found it demeaning its global operations. The duo decided to separate ways and dissolve their Joint Venture in December 2010. The 26-year long pact ended on a quiet note with strong individual aspirations to dominate the local market.

Five years post the split, Honda Motorcycles did everything possible in the book to overtake the ex (Hero MotoCorp’s) dominance in the Indian market – though the effort was monumental and appreciable, the Japanese has still a long way to achieve the feat. The efforts taken by Honda for the attempt to become the market leader was mind-boggling. In past 5 years, it expanded its outlets from mere 800 nos to 4,500 sales outlets! In 2015, Honda’s global sales of all products was 28 million units out of which global 2wheeler sales stood at 17 million units. Today, 25% of the total Honda two-wheelers sold across the world come from India. 3 manufacturing plants were opened in last 4 years! – Plants opened at Tapukara Rajasthan (in 2011), Narsapura Karnataka (in 2013) and scooters only plant at Vithalpur Gujarat (2016). These drastic steps allowed HMSI to climb to a market share of over 26% and stand as a real threat to the Indian Leader (Hero Motocorp). See the climb for yourself here –

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Source: Business Standard

The competition was intensified with Hero Motocorp’s response in said time and the Indian MNC challenged HMSI in their own game – by attacking the baseline (scooters). Hero’s retaliation shook the Japanese major quite hard and the scooter market share statistics changed within 6-month time frame! –

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Source: Business Standard

In September last year, Hero expanded its scooter offering with the launch of two products — Duet and Maestro Edge. Until then, the country’s largest two-wheeler maker had two scooters to offer: Pleasure and Maestro. These scooters were indigenously developed by Hero’s R&D and the long term plan is to dominate the scooter market as well. Other players jumped into the game as well and have gained pretty significantly in past 1 year – say TVS’s Jupiter and Yamaha’s Fascino were instrumental in the growth story of their respective OEMs in the previous fiscal. The latest OEM-wise ranking and Market Share data is here –

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*FY16 (Apr’15-Feb’16) and FY15 (Apr’14-Feb’15)

Hero aware of the path ahead, has taken drastic measures to improve its R&D. It has set-up its first dedicated Rs 850-crore R&D centre last month. The 247-acre facility near Jaipur will have 600 engineers by the end of this year. Hero had a tiny three-acre R&D setup before the Jaipur centre came up. The centre will be led by Hero’s chief technology officer Markus Braunsperger, who came from BMW in 2014 after a 25-year-long stint in R&D, production and strategy roles.

See how both the biggies fare on various factors as on date:

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Source: Business Standard

While both Hero & Honda have intensified their efforts to command dominance in the domestic two wheeler market; the consumers are at advantage as they’ll receive world class products and their demand will be given paramount importance. We at Auto Punditz are happy to see the way two-wheeler industry is shaping in the subcontinent and wish that the better OEM will win the race!

Pet’rol’ v/s ‘Die’sel

Rohan, a resident of Mumbai wanted to buy a hatchback for his office commute and weekend family getaway. While he zeroed down on the Swift to suit his requirement; he was confused on which fuel option to opt for. While the office commute wasn’t much distant; he didn’t want the weekend getaways to cost dear. While this dilemma had been confusing the average Indian Car Buyer for long, the answer is much easier now. The Diesel is slowly losing its charm (rather competitive advantage) and petrol is strongly gaining acceptance due to the mentioned reasons –

  • Minimal Price Gap (Currently Diesel is priced Rs.48.33/ltr vis-a-vis Rs.59.68/ltr for Petrol)
  • Petrol Cars are easier and cheaper to maintain
  • Hefty difference in Petrol Variant On-Road prices v/s the Diesel counterpart
  • Better Drivability in city and Lighter Clutch on Petrol Cars
  • Lower Emissions in Petrol Cars
  • Easier availability of Automatic option in Petrol
  • The uncertainty of laws (who knows when Diesel cars can be banned!)

The statistics looks something like this:

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Maruti Swift Petrol v/s Diesel On-Road Price*

*prices referred from Carwale – Exshowroom Delhi

Hence, Rohan has to shell out Rs.1.34 Lakhs more if he opts for the diesel Swift (Vdi variant v/s similar spec Vxi). The cost difference will extrapolate even higher if the car is purchased on loan (interest amount being superior in this case). The cost saving in fuels would also not be considerable to recover the initial loss. Let us consider Rohan’s monthly travel to be 1500 kms (50 kms/day multiplied by 30 days); the average monthly fuel expense will work out to be –

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Rohan will end up saving Rs.2143/mth in Diesel car v/s the Petrol (Realistic <not ARAI> Mileage values are taken for calculation). Hence to recover the initial loss of Rs.1.34 Lakhs; Rohan will have to wait 5.23 years considering the above calculation! The waiting time will get even higher if interest costs are considered.

Hence, Rohan undoubtedly ends up opting the Petrol car as his purchase and similarly many other consumers are following this trend. The same is clearly evident in the sales graph this year – while sale of Diesel Passenger Vehicles degrew by 6.22%; Petrol Car Sales saw a resurgent growth of 15.27%. Petrol variants contributed to over 56% in FY16 and we expect the contribution to grow much stronger in FY17. The detailed chart highlighting the Fuel-wise contribution percentage –

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Source: ET

While the topic has been debatable for quite some time, India had always been a big market for small petrol cars. That’s why the Alto has been the numero uno selling car in the sub-continent and currently globally as well. But, the global sales trend has been varied across nations. We could find the consolidated list of best-sellers across the world here –

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Source: India Today

Analysis of World’s Biggest Car Market – China

The Automotive Industry in China has been the largest in the world  since 2008. Since 2009, annual production of automobiles in China exceeds that of the European Union or that of the United States and Japan combined!

While we had studied the US & Pakistan Car Market, we always wanted to present a report on China’s Auto Sales considering these facts –

  • Similarity to Indian Market – Although we are estimated 15 years behind Chinese Automotive Market, India’s demographics and population has immense similarity with the neighbor. Currently, Chinese Car Market is over 7 times that of India (whereas population of China is only 1.1 times that of India)! Car Sales trend of past 15 years –
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Car Sales Analysis – China
  • Chinese love for SUVs/Crossovers is also similar – In 2015, sales of Crossovers and SUVs soared 52% to 6.22 million units, and MPVs increased 10% to 2.11 million nos, while sedans slumped 5.3% to 11.72 million units.
  • Sheer Size – China’s No.1 Selling car Wuling Hongguang (Chevrolet Enjoy) sells higher than what Toyota+GM+VW+Nissan+Renault+Skoda sells in India! In 2015, cars sales in China increased by 9.1% – a growth rate just behind of that of Europe. It remains the only market in the world which has crossed the 20 million units sales. Cars Sales Registration data for Top International Markets –
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*USA, Brazil and Russia include light vehicles (trucks)
  •  Trivial History – Major Automotive companies are ‘State-Owned‘ – China has its traditional “Big four” domestic car manufacturers: Shanghai General Motors, Dongfeng, FAW, and Chang’an. All the automotive MNC’s are made to tie-up with a state owned corporation for setting up shop in the country.
  • Highly Profitable Sector – The profit of car dealers in China is quite high comparing to the rest of the world, in most cases 10%. This is due to the non-transparent invoice price as announced by manufactures and to the premiums they charge for quick delivery. Due to the lack of knowledge for most customers, dealers can sell add-ons at much higher prices than the aftermarket. There is no regulation by either the government or associations. Hence OEMs make big buck as well with the volume!
  • Electric Cars Revolution – China’s electric car sales outstripped that of US’s in 2015. Near to 2,50,000 electric cars were sold in China last year!
  • Brands Galore – Near to 445 Brands/Models are in sale! Just imagine the plight of an average consumer – which car to pick?

Car sales in China increased 8.7% in 2015 to top 20 million units for the first time ever. Out of the Top 50 selling cars in China (for 2015), 13 brands are common to the Indian Market. However, the Indian counterpart sales is nothing to boast about. The sales analysis to be found here –

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Top 50 selling cars in China for 2015

China also has a Dragon’s share for the premium brands. China contributes to over 1/4th of the overall sales of the German biggies. The world’s no.1 premium car maker BMW stands second in the list in China. Audi ranks first in the Chinese rankings and over 32% of its sales comes from China! In 2015, for the first time ever in a calendar year, China was the most-important single-country market for Mercedes Benz. Mercedes Benz sales in China increased by 32.6% to a record 373,459 cars. In China, Mercedes Benz is still around 200,000 cars behind leader Audi but nearly on par with BMW. Important for Mercedes Benz’s bottom line, a third of all S-Class cars are now sold in China with deliveries of the Mercedes-Maybach in China around 500 cars per month.

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Premium Car Sales for FY 2015 – China

Since the introduction of economic reforms in 1978, China has become one of the world’s fastest-growing major economies. As of 2014, it is the world’s second-largest economy by nominal total GDP and largest by purchasing power parity(PPP). China is also the world’s largest exporter and second-largest importer of goods. China is a recognized nuclear weapons state and has the world’s largest standing army and second-largest defense budget. We have a lot to catch behind this Asian Superpower – and ensure we do not repeat mistakes that it did (the growth in cars made it the most polluted country in the world as well – right time to focus on BS6 and Electric Cars). Also Indian Government should initiate reforms on infrastructure and public transportation to target holistic growth.