Driven by the above factors, the used cars market is anticipated to grow at a compound annual growth rate (CAGR)

of 16 per cent during 201317, highlighted the RNCOS report titled, Booming Used Car Market in India Outlook 2017.

The passenger vehicles production in India touched 3.23 million units in 2012 13 and is expected to reach 10 million units by 202021. The industry is estimated to grow at a CAGR of 13 per cent during 2012 2021. In addition, the industry recorded exports worth US$ 9.3 billion in 201213 and is projected to touch US$ 30 billion by 2020 21, according to data from Automotive Component Manufacturers Association (ACMA). The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during April 2000 to October 2013 was recorded at US$ 9,079 million, amounting to 4 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India.

Government Initiatives The Government of India plans to introduce fuel-efficiency ratings for automobiles to encourage sale of cars that consume less petrol or diesel, as per Mr Veerappa Moily, Union Minister for Petroleum and Natural Gas, Government of India. The Union Budget 201314 added some incentives to the industry. The analysis by Deloitte on the Union Budget highlighted the following points:

The period of concession available for specified part of electric and hybrid vehicles till April 2013 has been extended up to March 31, 2015. The basic customs duty (BCD) on imported luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels was increased. The duty was raised from 75 per cent to 100 per cent on cars/motor vehicles (irrespective of engine capacity) with CIF value more than US$ 40,000; from 60 per cent to 75 per cent on motorcycles with engine capacity of 800 cc or more and on yachts and similar vessels from 10 per cent to 25 per cent. In addition, an increase in excise duty from 27 to 30 per cent has been allowed for SUVs with engine capacity exceeding 1,500 cc, while excise duty was decreased from 80 to 72 per cent, in case of SUVs registered solely to be used for taxi purposes. An exemption from BCD will be provided to lithium ion automotive battery for manufacture of lithium ion battery packs for supply to manufacturers of hybrid and electric vehicles. The excise duty on chassis of diesel motor vehicles for transport of goods reduced from 14 per cent to 13 per cent.

The Government of India allows 100 per cent FDI in the automotive industry through automatic route.

According to recent reports, India overtook Brazil and became the sixth largest passenger vehicle producer in the world

GM and Ford currently rank sixth and seventh, respectively, in the Indian passenger vehicles market.

"Ford and GM have not been able to connect with the Indian customer...people do not view them as aspirational brands," Hormazd Sorabjee, editor at Autocar India, said. He said new launches and improvement in distribution and sales network will help the two improve market share. "However, they will never get into the top league as they do not have entry level models that give volumes," Sorabjee said.

GM's sales increased from 69,000 cars in 2009 to 1.1 lakh cars in 2010 to 1.11 lakh cars in 2011.

The US auto major has been localising products to price them aggressively and widening its distribution and service network to tier II and tier III cities such as Hissar, Una, Nawashehar, Rohtak and Amritsar.

Domestic car sales stood at 158,513 units during February 2013 as against 213,362 units a year ago. Car sales are down 4.07% for the first 11 months of the fiscal year ending in March. UVs, yet again, came up trumps with a resounding growth of 34.85% y-oy, selling 47,859 units in domestic market during the month.

Mirroring the challenging economic environment, commercial vehicles continued to struggle, with domestic sales at 68,388 units dropping by 11.06%. Bearing the brunt of slowing economy, M&HCVs witnessed a sharp 34.7% fall in domestic sales that stood at 21,498 units in February 2013 compared to 32,933 units in the same month last year. As in the previous months, LCVs, especially SCVs in LCV sub-segment, shored up the sales tally of CVs with a year-on-year growth of 6.7%. Overall, commercial vehicles were down 11.1% during the month. Car market leader, Maruti Suzuki India Ltd (MSIL) saw its domestic sales of passenger vehicles fall by 9% y-o-y to 97,955 units in February 2013. All the products in its portfolio, except for Swift DZire, registered negative growth. Dzire, selling 18,316 units in domestic market notched up a robust 21.6% y-o-y growth during the month. With exports growing at 2.8%, the total sales of MSI at 109,567 units in February witnessed a 7.9% de-growth. Hyundai Motor India Ltd (HMIL), the second largest car player in India did slightly better. While domestic sales of HMIL at 34,002 units were down 7.6%, the exports rising by impressive 37.3% to 20,663 units made good the loss in sales in domestic market. Total sales of HMIL adding up to 54,665 units recorded a 5.7% uptick in February 2013. The segment-wise cumulative sales of HMIL in February 2013 were: A2 segment (Eon, Santro, i10, i20) - 46,387 units; A3 Segment (Accent and Verna) - 7,722 units; A4 Segment (Elantra) - 470 units; A5 segment (Sonata) - 20 units; and SUV (Santa Fe) - 66 units. Commenting on the sales, Rakesh Srivastava, Vice President, Sales and Marketing, HMIL said, The market was suppressed, as there was drop in enquiries with lower rates of conversions to purchase. The increase in fuel prices negatively impacted the already low market sentiment. We expect the challenge to continue in the next quarter until there is a significant change in macro-economic conditions. Tata Motors stayed in negative territory with domestic sales of its passenger vehicles plunging by massive 69.1% to 10,418 units in February 2013 from 33,730 units a year earlier. Commercial vehicle sales of Tata Motors in domestic market reading 47,584 units slipped by 10.2% y-o-y during February 2013. Domestic sales of LCVs rose by 9.8% y-o-y to 36,955 units. Hit severely by the sluggish economic conditions, Tata M&HCV sales at 10,629 units in Indian market were down 45.0% y-o-y during the month. Mahindra & Mahindra (M&M), picking up from where it had left in the previous month, continued its excellent run through to February 2013. M&M registered a 11% growth in its vehicle sales volume (including Mahindra Navistar trucks and exports), which stood at 47,824 units during February 2013, compared to 43,087 units in February 2012. The companys domestic sales stood at 44,399 units during February 2013, reflecting a 9.7% increase y-o-y. Mahindras Passenger Vehicles segment (which includes the UVs and Verito) clocked a growth of 14% in domestic sales at 23,42 1 units in February 2013 as against 20,573 units a year ago. As in the case of other CV majors, Mahindra Navistar was in negative terrain with domestic sales of its trucks sliding by 19.7% y-oy to 1,008 units during the month. Speaking on the performance, Pravin Shah, Chief Executive, Automotive Division, Mahindra & Mahindra commented, Our February 2013 performance is reflective of the customers preference for our products, for which we thank them. Honda Cars India Ltd (HCIL), having grown at feverish pace in the recent past, encountered a bump as companys domestic sales plummeted by 26.5% to 6,510 units in February 2013 from 8,856 units in the same month last year. The company exported 508 cars during the month. Modelwise domestic sales break-up of HCIL during February is as follows: Brio 2,916 units; Jazz 185 units; City 3,271 units; Civic 21 units; Accord 62 units; and CR-V 55 units. Likewise, Toyota Kirloskar Motor and Ford India were also in reverse gear, with their sales in Indian market falling steeply year-onyear by 23.4% and 44.1%, respectively. The same was the case with General Motors India that recorded a steep 19.8% fall in domestic sales to 7,106 units from the corresponding sales figure of 8,857 units last year.

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