India: Vehicle sales grow to 3.76 million units; electrified vehicle adoption policy introduced

Country projected to become the world's third vehicle market in 2020

2018/03/23

Summary

In India, the automotive industry contributes 7.1% to the total GDP and provides direct and indirect employment to about 32 million people. The industry has grown thanks to strong domestic demand and supportive government policies. India is the world's fifth largest vehicle manufacturer and fourth largest vehicle market. The government of India foresees that the country will surpass Japan to be the world's third vehicle market after China and the US in 2020.

Prime Minister Narendra Modi, who took office in May 2014, has been promoting the manufacturing industry under the "Make in India" initiative to create employment and increase exports. In July 2017 the government introduced a Goods and Services Tax (GST) that is applicable throughout the country. GST replaced numerous indirect taxes with different tax rates depending on the state, which sometimes impeded foreign investment. The implementation of GST was expected to create a unified market. However, OEMs are suffering from inconsistent policies including raising compensation tax rates on mid- and large-size cars and SUVs after the GST was introduced.

インドの生産・国内販売・輸出台数 インド国内乗用車セグメント別販売台数

 

As for policies to promote the adoption of electric vehicles, the government startled many OEMs by announcing in March 2017 that it plans for all new vehicle sales in the country to be electric vehicles by 2030. Since electric vehicles accounted for only 0.02% of the Indian vehicle market during the period April 2017-January 2018, a number of observers are skeptical about the feasibility of this target. Suzuki and Toyota criticized the government's plan to treat only electric vehicles favorably when hybrids are also important green vehicles. According to a report released in December 2017, the Society of Indian Automobile Manufacturers (SIAM) predicts that around 40% of new vehicle sales will be electric vehicles by 2030. In February 2018, some Indian papers reported that the government dropped its plan to push sales of electric vehicles only by 2030. The government was reported to announce that it would not formulate a separate policy to promote electric vehicles but prepare action plans instead.

The automotive industry is expected to grow in India, which has the world's second largest population of 1.2 billion people, half of which are 25 years old or younger. Many existing OEMs are planning to ramp up production and some new automakers intend to join the Indian market. Suzuki, the largest passenger carmaker in India, built its third plant in Gujarat and will increase its total production capacity to two million units in 2019. Kia Motors, a unit of the Hyundai Motor Group, will enter the Indian market upon starting operations at its first plant in the country in 2019. SAIC Motor has a plan to begin manufacturing its MG brand vehicles in India in 2019. PSA will reenter the Indian market by 2020 through joint ventures established with CK Birla, an Indian conglomerate.

Kia SP Concept Mahindra eKUV100
Kia SP Concept (Auto Expo 2018) Mahindra eKUV100 (Auto Expo 2018)

 

Related reports:
Indian Auto Expo 2018: Exhibitions from Tata, Mahindra, and European OEMs (Feb. 2018)
Indian Auto Expo 2018: Exhibitions from Maruti Suzuki, Hyundai/Kia, Honda, and Toyota (Feb. 2018)
Suzuki’s Indian operations: Production capacity to expand to 2.25 million vehicles (Jul. 2017)
India's automobile market: Introducing NCAP and Euro 6 compliant emission regulations (Apr. 2017)

 



Indian vehicle sales grow to 3.76 million in FY 2016-17; the share for SUVs expanded

New vehicle sales in India have increased steadily from FY 2013-2014, and the country surpassed Germany in domestic sales to become the world's fourth market after China, the US, and Japan. Indian sales grew to 3.76 million units in FY 2016-2017, up 8.2% from the previous year, and rose 9.9% y/y to 3.37 million units during the first ten months of FY 2017-2018.

By segment, small vehicles with lengths of up to 4 m (compact or smaller) continue to account for over 60% of the entire passenger vehicle market. The small vehicle segment is expected to maintain a large share as the tax rate gap between small and mid- to large-size vehicles is still wide after the GST was introduced. The share of mid- to large-size vehicles with lengths exceeding 4 m (excluding SUVs) shrank to 6.4% for the first ten months of FY 2017-18 from 17.1% in FY 2012-13, whereas the share for SUVs expanded from 20.8% to 27.7% over the same period.

Vehicle production in India has increased consistently since FY 2013-14 and reached 4.6 million units in FY 2016-17, up by 8.2% from the year before. During the first ten months of FY 2017-2018, production also grew by 5.8% y/y to 3.98 million units.

Vehicle exports from India have been growing gradually and reached 870,000 units in FY 2016-17, up by 14.7% from the previous year. However, exports fell by 3.6% y/y to 690,000 during the first ten months of FY 2017-2018.

 

Vehicle production, domestic sales and exports for India

(Units)

FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
FY
2016-17
Apr.-Jan.
FY2016-17
Apr.-Jan.
FY2017-18
Production Passenger vehicles 3,231,058 3,087,973 3,221,419 3,465,045 3,791,540 3,111,105 3,289,074
Commercial vehicles 832,649 699,035 698,298 786,692 810,286 653,635 694,929
Total 4,063,707 3,787,008 3,919,717 4,251,737 4,601,826 3,764,740 3,984,003
Sales in India Passenger vehicles 2,665,015 2,503,509 2,601,236 2,789,208 3,046,727 2,509,401 2,711,930
Commercial vehicles 793,211 632,851 614,948 685,704 714,232 559,889 659,997
Total 3,458,226 3,136,360 3,216,184 3,474,912 3,760,959 3,069,290 3,371,927
Exports Passenger vehicles 559,414 596,142 621,341 653,053 758,830 624,787 613,077
Commercial vehicles 80,027 77,050 86,939 103,124 108,271 91,305 77,352
Total 639,441 673,192 708,280 756,177 867,101 716,092 690,429

Source: MarkLines Data Center

(Note) 1. FY 2012-13 refers to the period April 2012-March 2013.
2. "Passenger vehicles" include passenger cars, utility vehicles and vans according to SIAM's classification.
3. BMW, Audi, JLR and Mercedes-Benz vehicles are not included after FY 2012-13 (the same applies below).

 

Vehicle sales in India by segment

(Units)

Segment FY
2012-13
FY
2013-14
FY
2014-15
FY
2015-16
FY
2016-17
Apr.-Jan.
FY2016-17
Apr.-Jan.
FY2017-18
Micro 53,843 21,129 16,901 21,012 7,591 7,105 1,770
Mini 570,023 568,234 524,247 542,632 582,811 488,131 479,061
Compact 795,580 975,823 1,080,413 1,189,862 1,266,985 1,043,216 1,149,266
Super Compact 226,502 45,770 47,284 72,676 66,991 58,231 19,297
Mid-size 200,176 155,090 186,584 181,450 163,567 131,598 143,198
Executive 23,537 18,250 20,206 15,360 11,730 9,853 8,855
Premium 4,387 2,529 2,064 2,105 3,317 2,734 2,293
Luxury 2 1 7 0 4 4 6
Total Passenger Cars 1,874,050 1,786,826 1,877,706 2,025,097 2,102,996 1,740,872 1,803,746
Utility vehicles 553,662 525,839 552,135 586,576 761,997 618,422 750,080
Vans 237,298 190,844 171,395 177,535 181,734 150,107 158,104
Total Passenger Vehicles 2,665,010 2,503,509 2,601,236 2,789,208 3,046,727 2,509,401 2,711,930
Total Commercial Vehicles 793,211 632,851 614,948 685,704 714,232 559,889 659,997
Grand Total 3,458,221 3,136,360 3,216,184 3,474,912 3,760,959 3,069,290 3,371,927

Source: MarkLines Data Center

 



Introduction of the Goods and Services Tax (GST): 43% for hybrid vehicles; 12% for electric vehicles

The government of India has unified a number of indirect taxes with different rates depending on the state and introduced the Goods and Services Tax (GST), which is applicable throughout the nation, on July 1, 2017. Under the new regime, the GST rate of 28% is applied to most vehicles, while electric vehicles have 12% applied. In addition to the GST, a tax is levied to compensate the tax revenue losses. With the introduction of the GST, total tax rates have fallen significantly for most automobiles excluding hybrid vehicles. Many automakers tried to stimulate demand for vehicles by reducing prices.

However, the government decided to increase the tax rate for mid- and large-size cars of length exceeding 4 m as well as SUVs in September 2017, stating that after the GST was introduced, the total tax incidence on vehicles has come down compared to the total tax incidence in the pre-GST regime. As a result, automakers were forced to reverse price cuts that were implemented when GST was introduced. Some OEMs are concerned that lack of consistent and long-term policy may have adverse effect on investment in new products and technologies.

Hybrid vehicles attract a total tax rate of 43% consisting of a GST rate of 28% and tax rate of 15%. While the tax rate was not raised for hybrids, the total tax rate has increased compared to the rate of 30.3% in the pre-GST regime, and is much higher than the total tax rate of 12% for electric vehicles. As the government of India had promoted hybrids to address environmental problems, Suzuki introduced diesel mild hybrid versions of the Ciaz and Ertiga, and Toyota launched the Camry Hybrid and Prius. Sales of hybrid models were negatively impacted with the rise in prices reflecting tax increase after the GST was introduced.

Regarding vehicle sales by segment before and after the introduction of the GST, sales in most segments fell in June 2017 as consumers waited to purchase vehicles in anticipation of a drop in tax rates in the post-GST regime. After the GST was implemented in July 2017, sales of Super Compact vehicles, which were categorized as vehicles with lengths exceeding 4 m, dropped significantly. However, sales of SUVs surged in July and continued to increase even after the tax rate was raised in September.

 

GST and compensation cess introduced in July 2017

Goods and Services Tax (GST) The Goods and Services Tax (GST) is an indirect tax that was introduced in India on July 1, 2017 and is applicable throughout the country. 17 taxes and 23 special taxes for specific purposes such as welfare were unified under the GST. The tax rates, which had been different depending on the state, were standardized, and complicated tax schemes were eliminated. The GST rate of 28% is applied to passenger and commercial vehicles and automotive parts, while the rate of 12% is applied to electric vehicles (including motorcycles and tricycles).
Compensation Tax A compensation tax is levied in addition to the GST on specific items to compensate for the resulting tax revenue losses on the part of the states. The tax rates were set at 1-3% for small vehicles and 15% for mid-size and large vehicles (see the Table below). With a tax rate of 15%, hybrid vehicles attract a total tax rate of 43.0%, which has been raised from the total indirect tax rate of 30.3% in the pre-GST regime.

 

Compensation cess rate raised in September 2017

Increase in tax rate for mid- and large-size cars and SUVs In September 2017, the Ministry of Finance approved the hike in the tax ceiling on vehicles to 25% from the earlier 15% in accordance with the GST Council's proposal. The GST Council made the decision since they realized that, after the introduction of GST, the total tax incidence on vehicles has come down compared to the total tax incidence in the pre-GST regime. Thus, the tax rates for mid- and large-size cars as well as SUVs have been raised by 2-7 percent points (see the Table below).

 

Indirect taxes placed on automobiles

Segment Until June 2017 After June 2017 After September 2017
Total Breakdown Total Breakdown
Small car
(length< 4m; Petrol <1200 cc)
30.2% 29.0% GST 28.0% 29.0% GST 28.0%
Cess rate 1.0% Cess rate 1.0%
Small car
(length < 4m; Diesel < 1500 cc)
30.2% 31.0% GST 28.0% 31.0% GST 28.0%
Cess rate 3.0% Cess rate 3.0%
Mid-size car
(Engine displacement <1500 cc)
47.3% 43.0% GST 28.0% 45.0% GST 28.0%
Cess rate 15.0% Cess rate 17.0%
Large car
(Engine displacement >1500 cc; excluding SUV)
49.0% 43.0% GST 28.0% 48.0% GST 28.0%
Cess rate 15.0% Cess rate 20.0%
SUV
(Engine displacement >1500 cc; Ground clearance >170mm)
55.3% 43.0% GST 28.0% 50.0% GST 28.0%
Cess rate 15.0% Cess rate 22.0%
Hybrid vehicle (HV) 30.3% 43.0% GST 28.0% 43.0% GST 28.0%
Cess rate 15.0% Cess rate 15.0%
Electric vehicle (EV) 12.0% 12.0% GST 12.0% 12.0% GST 12.0%
Cess rate 0.0% Cess rate 0.0%

Source: Created by MarkLines based on releases from Central Board of Excise and Customs (CBEC) and Ministry of Finance and various media reports
(Note) Although the tax rates differed depending on the state before GST was introduced, the average rate is shown in the table above.

 

Sales by segment in India before and after introduction of the GST

(Units)

June 2017 July 2017 August 2017 September 2017 October 2017
units y/y units y/y units y/y units y/y units y/y
Compact and below (length < 4m) 124,860 -9.3% 175,282 11.1% 176,181 12.2% 185,369 8.4% 166,478 -2.7%
Super Compact and above (length > 4m) 12,035 -27.2% 17,491 -11.8% 22,630 8.8% 23,287 -3.8% 18,188 -23.8%
Total Passenger Cars 136,895 -11.2% 192,773 8.5% 198,811 11.8% 208,656 6.9% 184,666 -5.3%
Utility Vehicles 49,547 -11.2% 86,874 35.5% 78,664 19.6% 84,374 26.2% 79,323 12.4%
Vans 11,957 -10.7% 19,350 7.6% 16,860 11.3% 16,925 3.7% 15,848 5.0%
Total Passenger Vehicles 198,399 -11.2% 298,997 15.1% 294,335 13.8% 309,955 11.3% 279,837 -0.3%
Total Commercial Vehicles 56,890 1.4% 59,000 13.8% 65,310 23.2% 77,195 25.3% 69,793 6.4%
Grand Total 255,289 -8.7% 357,997 14.9% 359,645 15.4% 387,150 13.9% 349,630 1.0%

Source: MarkLines Data Center

 

Suzuki Ciaz Suzuki Vitara Brezza
Suzuki Ciaz
(Auto Expo 2018)
Suzuki Vitara Brezza
(Auto Expo 2018)


Government pursuing India's transition to electric mobility by 2030

In March 2017, the government of India startled OEMs by revealing its plan for all new vehicle sales in the country to be electric vehicles by 2030. Electric vehicles accounted for only 0.02% of the Indian vehicle market during the period April 2017-January 2018. Many OEMs are skeptical of the feasibility of the government's target. SIAM predicts that 40% of new vehicle sales will be electric vehicles by 2030. In February 2018, some Indian papers reported that the government dropped its plan to push sales of electric vehicles only by 2030. The government was reported to announce that it would not formulate a separate policy to promote electric vehicles but prepare action plans instead.

Mahindra, the sole manufacturer of electric vehicles in India, unveiled a roadmap for electric vehicle technology and products in line with the government's plan for rapid adoption of electric vehicles. The automaker also plans to make an additional investment of INR 5 billion at its Chakan plant for the production of electric vehicles. In November 2011 Toyota and Suzuki announced a partnership to launch electric vehicles in India around 2020.

 

Government's plans to drive adoption of electric vehicles

FAME-India Scheme (April 1, 2015-March 31, 2018) Under the FAME-India (Faster Adoption and Manufacturing of Hybrid & Electric vehicles in India) Scheme, the government has been supporting production and sale of electric vehicles in four areas: technology development, demand creation, pilot projects, and charging infrastructure. The first phase was implemented over the period April 1, 2015-March 31, 2017 with an approved outlay of INR 7.9 billion. The government has extended demand incentives of INR 1.3 billion for purchase of 111,897 electric/hybrid vehicles. The first phase was extended to March 31, 2018 with an approved investment of INR 1.7 billion.
After April 2017, demand incentives for mild hybrid vehicles have been abolished.
Initiative for the adoption of electric vehicles (announced on March 27, 2017) According to a release dated March 27, 2017 from the Ministry of Power, Prime Minister Narendra Modi has directed a group of senior Ministers to lead an initiative to convert all vehicles in India to electric vehicles by 2030.
This conversion has the potential to save fossil fuels at an amount valued at about USD 100 billion annually, which in turn would save foreign exchange, prevent dependence on imported petroleum products, and reduce the pollution in cities by 80-90%. The government says that India can power its entire vehicular traffic in 2030 on solar power by using only 1% of the land area of Rajasthan.
Government may drop electric vehicle plan (reported in February 2018) In February 2018, some Indian newspapers reported that the government has stepped back from its plan to only have electric vehicles sold in the country by 2030. Road Transport and Highway Minister Nitin Gadkari said, "There is no need for an explicit policy to promote electric vehicles. The government is preparing action plans instead." As a result, OEMs have more freedom to choose not only electric vehicles but hybrids and other technologies to reduce CO2 emissions and crude oil imports.

(Note) According to its report released in December 2017, SIAM predicts that all new vehicle sales for public transport fleets and 40% of new vehicle sales will be electric vehicles by 2030. SIAM predicts that new vehicle sales will be 100% electric vehicles in 2047.

 

Mahindra unveils roadmap for electric vehicle technology and products

Investment in electric vehicle technology and charging infrastructure Mahindra Electric, a member of the Mahindra Group, unveiled a roadmap for electric vehicle technology and products in May 2017. In line with the government's intention to drive faster adoption of electric vehicles, the automaker is planning to invest in the development of next generation electric vehicles and related technology solutions (high-end electric powertrains, motor controllers, system integration, and battery technology) as well as the establishment of charging infrastructure. There are over 2,700 Mahindra-made electric vehicles on the road, and these have cumulatively traveled more than 40 million km as of May 2017.
Additional investment in Chakan plant In February 2018, Mahindra announced that it would make an additional investment of INR 5 billion at its Chakan plant in Maharashtra for manufacturing electric vehicles. The investment is in addition to its ongoing expansion plan, which includes an initial investment of INR 65 billion. The additional investment will be utilized towards product development and capacity enhancement for electric vehicles and related components.
Collaboration with LG Chem In February 2018, Mahindra and LG Chem, a major Korean battery manufacturer, announced a collaboration in the field of advanced lithium-ion battery technology. LG Chem will develop a unique cell exclusively for use in India and supply lithium-ion cells based on NMC (nickel-manganese-cobalt) chemistry with high energy density for the Mahindra and SsangYong range of electric vehicles. LG Chem will also design lithium-ion battery modules for Mahindra Electric.

 

Toyota and Suzuki to cooperate to launch electric vehicles in India around 2020

Toyota and Suzuki signed a memorandum of understanding on considering a business partnership in February 2017. In November of the same year, the two companies agreed to cooperate on launching electric vehicles in India around 2020. Specifically, Suzuki will produce electric vehicles for the Indian market and supply some of these vehicles to Toyota, while Toyota will offer technical support. The two companies will also conduct a comprehensive study on activities aimed at the introduction and acceptance of electric vehicles in India. These activities will encompass the establishment of charging stations, human resource development that includes training of automotive technicians employed throughout sales networks, and preparation of a treatment system for used batteries.


OEM activities: Kia Motors, SAIC Motor and PSA plan to enter Indian market

Suzuki to increase annual production capacity in India to 2 million units in 2019

First line at Gujarat plant Suzuki started operations of the first production line at its Gujarat plant in February 2017 and reached full production at the end of 2017. The first line has an annual production capacity for 250,000 units. The Gujarat plant is Suzuki's first wholly-owned car plant in India. Maruti Suzuki previously operated two plants: the Gurgaon plant and the Manesar plant, which have a total annual production capacity of 1.5 million units.
Second line at Gujarat plant Suzuki began building a second line at its Gujarat plant in September 2017. The second line is slated to be operational at the beginning of 2019, and will have an annual production capacity of 250,000 units for vehicles and 500,000 units for both engines and transmissions. The total investment amounted to USD 1.5 billion. When the second line is completed, Suzuki will have a total annual production capacity of 2 million units in India. In June 2017, Suzuki unveiled a plan to establish a third line (annual production capacity of 250,000 units) that will start production in the early 2020s. (Suzuki's total annual production capacity upon completion of the third line is unknown since capacities of existing plants will be reviewed.)
Lithium-ion battery plant In September 2017, Suzuki's joint venture with Toshiba and Denso started building a lithium-ion battery plant near its Gujarat plant. Suzuki has a 50% stake in the joint venture, while Toshiba holds 40% and Denso the remaining 10%. The total investment will amount to USD 180 million, and the battery plant is scheduled to start operations in 2020 with an annual battery capacity for 600,000 vehicles (which is equivalent to 30% of Suzuki's projected early 2019 annual production capacity of 2 million vehicles).

 

Toyota enjoys strong sales of Innova and Fortuner; plans to launch new Yaris and Land Cruiser Prado in FY 2018-19

Toyota announced that its sales in India for 2017 grew by 5% y/y. The company achieved a milestone of recording the highest ever IMV* sales (73,000 units of the Innova and 24,000 units of the Fortuner) in the country. Sales volume of the Camry Hybrid was impacted by increased prices resulting from a tax increase after the GST was introduced. As the current Camry Hybrid already meets the applicable emission levels set by the BS-VI emission regulation, which will be introduced in 2020, Toyota will continue to have a strong focus on the model in 2018.
* IMV: Innovative International Multi-purpose Vehicles; Toyota's global strategic models for the emerging markets
Toyota plans to launch the new Yaris, a B-segment model, and the new Land Cruiser Prado, a mid-size SUV, in FY 2018-2019.

Toyota Yaris Toyota Fortuner
Toyota Yaris (Auto Expo 2018) Toyota Fortuner (Auto Expo 2018)

 

Mahindra and Ford to partner for electrification and mobility programs for three years

In September 2017, Mahindra & Mahindra and Ford announced a wide-ranging partnership to explore cooperation in areas as diverse as mobility programs, connected vehicle projects, electrification, product development, sourcing, Ford's sales in India, and Mahindra's sales outside India. The initial partnership is for a period of three years, and may be renewed or discontinued at the end of the period. In 1995, the companies established a joint venture to produce the Ford Escort in Chennai. The partnership was eventually dissolved in 1999.

 

Tata Motors, Volkswagen Group and Skoda to jointly develop economy-segment vehicles

Tata Motors, the Volkswagen Group, and Skoda signed a memorandum of understanding on March 10, 2017 for a long-term partnership to explore strategic alliance opportunities for joint development of products. Skoda will take the lead on behalf of the Volkswagen Group to develop vehicles in the economy segment with Tata Motors. Through this partnership, Tata will adopt new technologies and foster higher platform efficiency, while the Volkswagen Group will offer customer-oriented mobility solutions in emerging markets. Based on this joint work, Tata plans to launch new models in India, starting in 2019.

Remark:  In August 2017, Tata Motors and Skoda concluded that the envisioned areas of partnership may not yield the desired synergies as originally assessed. The two companies have decided to keep in touch for future areas of collaborations.

 

Hyundai to launch nine new models including one electric vehicle by 2020

At the Auto Expo 2018, Hyundai announced plans to launch nine new models in India by 2020: two face-lifted models, two new segment models, four redesigned models, and one electric vehicle.

 

Kia Motors to start operations at a new plant in late 2019

Kia Motors plans to build a new manufacturing facility, its first plant in India, in the state of Andhra Pradesh with an investment of USD 1.1 billion. Construction of the new plant commenced in February 2018 and its operations will begin in late 2019 with an annual production capacity of 300,000 units. Kia Motors is projected to produce a compact sedan and compact SUV at the new plant and launch these models in India at the end of 2019. The new plant will incorporate facilities for stamping, welding, painting, and assembly. The site also has a space for numerous suppliers' facilities.

 

SAIC Motor to build a plant to produce MG brand vehicles

In September 2017, SAIC Motor signed a memorandum of understanding with the Government of Gujarat to build a plant for production of MG brand vehicles in Halol. SAIC Motor acquired GM's Halol plant, where the US automaker terminated production at the end of April 2017, and will renovate it. A total investment of INR 20 billion will be made over the next five years. SAIC Motor is scheduled to start production at the new plant in 2019 and roll out 50,000-70,000 vehicles in the first year of operation.

 

PSA to reenter India through joint ventures with the Indian conglomerate CK Birla

Reentering the Indian market In January 2017, the PSA Group and CK Birla, an Indian conglomerate, agreed to establish joint ventures to produce and sell vehicles and components in India by 2020. Through these joint ventures, PSA will reenter the Indian market after a two-decade absence. The two companies set up two joint ventures, which will build two manufacturing facilities in Tamil Nadu with an investment of INR 7 billion.
JV with HMFCL to build vehicles PSA and Hindustan Motor Finance Corporation Limited (HMFCL), a unit of CK Birla, established the first joint venture in which PSA holds a majority stake. This company will construct a plant in Tamil Nadu to assemble and distribute PSA passenger cars in India.
JV with AVTEC to produce powertrains Under a second agreement, a 50:50 joint venture was set up between PSA and AVTEC Ltd, another unit of CK Birla. In November 2017, the company held a cornerstone-laying ceremony for a powertrain plant in Hosur, Tamil Nadu. The plant is scheduled to start operation in early 2019 with an initial production capacity of 200,000 units per year.

 

Volvo Cars starts XC90 production in India

In October 2017, Volvo Cars started production of its vehicles in India. Volvo Cars worked together with Volvo Group, the truck, bus and construction equipment manufacturer, and made use of Volvo Group's existing infrastructure and production licenses near Bangalore in southern India to assemble the XC90, a premium SUV. Volvo Cars plans to build other models underpinned by the SPA platform in the future. The OEM had a premium segment share of nearly 5% in India in 2017 and aims to double this by 2020.

 

GM ceases sales in Indian market and makes it an export hub

Consolidating production at Talegaon plant At the end of April 2017, GM terminated operations at its Halol plant in Gujarat and consolidated production at its Talegaon plant in Maharashtra, western India. In May 2017, GM unveiled plans to discontinue sales in India by the end of 2017 and focus its operations on producing vehicles at the Talegaon plant for export.
Making Talegaon plant an export hub In August 2017, GM announced that exports from its Talegaon plant have tripled over the past year. GM ranked fifth in exports during the period April-June 2017 among passenger car manufacturers in India. The OEM has achieved significant milestones in export manufacturing, including the launch of the Chevrolet Beat compact sedan to Latin American markets, and the start of engine and vehicle kit exports.


Sales Forecast by LMC Automotive: Indian light vehicle sales to increase to 4.99 million units in 2021

LMC Automotive, Q4 2017)

インドのlight vehicle販売予測

Although light vehicle sales in India experienced a short-term downswing after the Goods and Services Tax (GST) came into effect on 1 July 2017, LMC Automotive concluded that the market is on an upswing. Following the double-digit growth in 2017, LMC Automotive estimates light vehicle sales will grow at a slightly weaker pace in 2018. In the long term, sales are projected to expand by 7.6-10.0% annually to reach 4.99 million units in 2021, up by 35.3% from 2017.

As the market leader in India, Suzuki is undoubtedly confident of increasing its volumes in the country. In October 2017, Maruti-Suzuki added a second shift to the Suzuki-owned Hansalpur plant in Gujarat to reduce waiting times for the in-demand New Baleno and Maruti-Suzuki Vitara Brezza. Suzuki also plans to invest another USD 585 million to set up a third manufacturing line at its Hansalpur plant to take the site's annual capacity up to 750,000 units by 2020. A second line, with an annual capacity of 250,000 units, is already under construction, along with a 500,000-unit/year engine plant. These two units are likely to start operations by 2019. According to LMC Automotive's latest forecast (Q4 2017), Suzuki's light vehicle sales in India are expected to grow gradually after 2018 and will be 1.74 million units in 2021, up by 9.0% compared to 2017.

Under the umbrella of the Hyundai Motor Group, the second largest automaker in India, Hyundai is shifting production of the fifth-generation Accent/Verna from Korea to India. In October 2017, the automaker received a record high export order for the new Accent from the Middle East. It will start exporting the latest Accent to South Africa, as well as other Gulf and Asian countries in early 2018. Hyundai's sister brand, Kia Motors, plans to invest USD 1.1 billion to set up a manufacturing unit in Anantapur in southern India. The facility is slated to launch operations in 2019, with an annual capacity of 300,000 units. LMC Automotive forecasts that the Hyundai Motor Group's light vehicle sales in India will fall by 1.8% y/y in 2018, but then grow to 789,820 units in 2021, up by 48.9% from 2017.

 

Indian light vehicle sales forecast by make (LMC Automotive, Q4 2017)

(Units)

SALES GROUP GLOBAL MAKE 2015 2016 2017 2018 2019 2020 2021
Total 3,128,003 3,352,494 3,686,768 3,895,801 4,284,755 4,633,446 4,987,118
Suzuki Group Suzuki 1,284,883 1,395,268 1,598,295 1,600,777 1,647,003 1,682,441 1,742,333
Hyundai Group Hyundai 476,001 500,537 530,332 520,907 572,419 567,608 609,259
Kia 0 0 0 0 5,694 109,608 180,561
Hyundai Group sub-total 476,001 500,537 530,332 520,907 578,113 677,216 789,820
Tata Group Tata 289,786 307,519 355,308 436,922 498,358 549,944 573,216
Land Rover 1,452 1,716 2,406 2,478 2,428 2,816 3,034
Jaguar 1,253 684 1,583 1,642 1,592 1,708 1,780
Tata Group sub-total 292,491 309,919 359,297 441,042 502,378 554,468 578,030
Mahindra Group Mahindra 361,475 393,448 418,759 458,625 515,370 531,933 557,065
Ssangyong 396 155 8 0 0 0 0
Mahindra Group sub-total 361,871 393,603 418,767 458,625 515,370 531,933 557,065
Renault-Nissan-Mitsubishi Renault 21,018 108,551 99,975 114,375 148,736 165,510 171,965
Datsun 19,378 39,009 41,234 60,936 70,576 75,937 89,195
Nissan 21,547 14,725 13,128 18,214 32,427 35,641 49,352
Dacia 32,829 23,684 18,283 22,335 26,940 30,425 32,310
Mitsubishi 1,981 816 530 753 727 747 777
Renault-Nissan-Mitsubishi sub-total 96,753 186,785 173,150 216,613 279,406 308,260 343,599
Honda Group Honda 202,403 154,506 182,733 202,289 219,136 223,719 243,892
Toyota Group Toyota 139,820 134,141 140,577 149,175 181,890 242,376 231,281
Lexus 0 0 236 379 411 415 465
Toyota Group sub-total 139,820 134,141 140,813 149,554 182,301 242,791 231,746
Ford Group Ford 77,715 86,425 90,798 97,000 108,843 112,692 142,615
Volkswagen Group Volkswagen 43,162 47,323 47,859 55,042 53,931 56,700 63,328
Skoda 15,457 13,370 17,595 23,047 20,538 25,550 25,032
Audi 11,192 7,074 7,602 11,798 14,204 15,206 17,379
Volkswagen Group sub-total 69,811 67,767 73,056 89,887 88,673 97,456 105,739
Fiat Chrysler Automobiles Jeep 0 316 13,045 19,932 28,119 37,492 43,083
Fiat 8,575 6,330 2,967 3,003 6,985 13,725 14,997
Fiat Chrysler Automobiles sub-total 8,575 6,646 16,012 22,935 35,104 51,217 58,080
SAIC Group MG 0 0 0 0 14,568 20,173 29,638
Daimler Group Mercedes-Benz 13,502 13,231 15,333 14,180 15,940 18,023 20,777
Isuzu Motors Isuzu 1,708 2,310 3,880 7,504 17,465 18,269 20,101
PSA Group Peugeot 0 0 0 0 0 3,662 19,373
BMW Group BMW 6,550 7,706 8,609 7,326 8,522 9,947 11,219
MINI 340 355 441 381 380 366 370
BMW Group sub-total 6,890 8,061 9,050 7,707 8,902 10,313 11,589
Geely Group Volvo 1,423 1,584 1,921 3,299 3,628 3,869 4,089
General Motors Group Chevrolet 20,175 13,957 4,154 0 0 0 0
Wuling 5,186 5,708 253 0 0 0 0
Isuzu 11,320 9,284 3,028 0 0 0 0
General Motors Group sub-total 36,681 28,949 7,435 0 0 0 0
Other Indian
Manufacturers
Ashok Leyland 26,625 30,203 34,990 31,176 34,214 39,264 45,542
Force 23,357 24,987 23,432 22,590 23,176 26,508 30,452
Bajaj 0 0 0 2,705 2,995 3,135 3,779
Eicher 451 1,885 2,758 2,162 2,289 2,439 2,626
Premier 2,006 1,988 2,034 1,978 2,055 2,114 2,515
Other Indian Manufacturers sub-total 52,439 59,063 63,214 60,611 64,729 73,460 84,914
Other Piaggio 5,037 3,699 2,682 2,871 3,196 3,484 3,718

Source: LMC Automotive "Global Automotive Sales Forecast (Quarter 4, 2017)"
(Note) 1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.
For more detailed information or inquiries about forecast data, please contact LMC Automotive.


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