Forecast for the development of the passenger car market
The relevance of research
Cars are more than just an engine, gearbox, body, interior and tires. They are full of the latest technologies and innovations that make modern cars smarter, more efficient and safer.
Passenger cars are used to transport passengers, passengers with cargo or just cargo. The load can be a refrigerator, a TV or a wardrobe, or maybe a dog or a baby stroller. It all depends on how you use the car
Purpose of the study
Analysis of the state of the passenger car market, assessment of the market size, analysis of competitors, as well as identification of factors affecting the car market
Content
Chapter 1. Economic characteristics of the passenger car market
1.1. Market size
1.2. Market Growth Rate
1.3. Market trends
1.4. The main problems of the industry
1.5. Industry life cycle stage
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. The pace of technological change and product innovation
1.9. Sales channels
1.10. Compact location of industry companies in certain regions
Chapter 2. General economic environment
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Competition from substitute products
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
4.3.2. Scenario of two quarantines
4.4. Analysis of existing cases of business restructuring in the industry
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Chapter 1. Economic characteristics of the passenger car market
1.1. Market size
At the same time, the Indian market retains long-term growth potential due to the lower density of the car park compared to Western countries and its significant age.
...
In 2019, key players in the passenger car market in India turned their attention to online by launching or announcing the launch of sales. Online selling opens up the opportunity to build a data-driven marketing function and effectively answer key management questions.
...
1.2. Market Growth Rate
The Indian car market has been steadily declining since the annexation of Crimea and subsequent Western sanctions.
...
Diagram 1. Dynamics of the volume of the passenger car market, 2013 - 2019, million units
1.3. Market trends
Let's highlight the main trends in the car market:
Strengthening the technological equipment of vehicles;
Falling sales of new cars;
...
Refusal of car ownership by the younger generation.
Increase in the cost of buying and maintaining a car;
Growing popularity of electric vehicles;
International cooperation in the automotive industry;
The customer journey of buying a car becomes multi-channel, stimulating the expansion of the presence of players in the online;
Maintaining social distance. Traveling in a private car can significantly reduce the number of contacts with people;
Growth of the secondary car market;
Development of remote car sales;
Car manufacturers are beginning to engage in direct sales, which means that dealer networks will gradually leave the market. In the future, nothing more than a point of issue of a car may be formed, and over time, perhaps, the distribution of Yandex. The dealer business will remain, at best, like dealer stations.
1.4. The main problems of the industry
The automotive industry is one of the problematic sectors of the Indian economy. The level of consumer complaints about the performance quality of Indian automotive products remains high.
The main problems of the industry include the following:
...
The restoration of the Indian car market will begin only if the prosperity and purchasing power of the population grows, which also largely depends on the policy of the authorities and on the policies of firms that currently have a serious influence on the Indian market.
1.5. Industry life cycle stage
The passenger car market has been in a mature stage for a long time. The reason for this is the possibility of extending the maturity period by creating new modifications of the product that maintain the interest of buyers in it. This is the way the automotive industry is going, modifying either the basic structure of the car, or the security systems, or the design. The active development of technologies and the introduction of innovations also contribute to this.
...
1.6. Estimation of the number of buyers and their financial capabilities
The minimum age to be able to drive a personal car is 18 years old. Ownership of a private car is most developed in cities. Despite the growth of the urban population as a whole, the size of the working-age population in cities is declining.
It is also worth noting the dynamics of obtaining a driver's license by the population.
According to the traffic police, a total of 2018 million driver's licenses were issued to citizens in 1,35, of which more than 1 million were category B. …
Diagram 3. Dynamics of issued driver's licenses in India, 2015-2019, million people
...
Let's take a look at some experts' assessments:
India's GDP may shrink by …% in 2020, …
June 10, 2020 The Organization for Economic Co-operation and Development (OECD) predicted two possible scenarios for India's GDP dynamics in 2020.
...
Dollar rate
...
Transport complex
The development of road transport is determined primarily by the parameters of employment. The growing motorization of the population and the competitive pressure of alternative modes of transport will require road carriers to improve the quality level (updating the rolling stock), the regularity and safety of the services provided. First of all, this concerns small and medium-sized enterprises, which in recent years have grown due to extensive factors (an increase in the number of operated routes and a fleet of vehicles on it).
...
Significant bottlenecks in India's transport system are:
lack of capacity of the federal road network (primarily on the approaches to large cities and transport hubs of the country), the proportion of the length of federal highways operating in overload mode increases with an increase in the number of cars;
the lack of a fully formed backbone transport network throughout the country, which hinders the economic development of remote regions, limits the mobility of the population and the transportation of goods.
The general development of transport services has a positive impact on the car market.
...
Rising car costs
In large cities, car sharing becomes more profitable.
...
Growth in car loans
...
At the same time, the growth in the issuance of car loans is associated, first of all, with the operation of state programs for preferential lending. The state programs ""First Car"" and ""Family Car"" in 2019 were launched in March, as soon as the Indian car market began to fall.
...
2.2. Social Components
Population decline
Diagram 13. Dynamics of the population of India, million people, as of 01 Jan. 2012-2020
Earlier, Rosstat published a demographic forecast until 2036. The most optimistic scenario assumes an increase in the country's population to …
Real disposable money income
Real disposable money income per capita is income minus mandatory payments, adjusted for inflation. This factor determines the level of effective demand of buyers, is one of the key reasons for the formation of the dynamics of both retail turnover and demand for services.
...
The needs of a new generation
...
2.3. Technological components
Transport congestion
At the end of 2019, among Indian cities, the leader in congestion is, located on the sixth line of the world ranking of the annual study ......
Development and implementation of innovative technologies
Cars are more than just an engine, gearbox, body, interior and tires. They are full of the latest technologies and innovations that make modern cars smarter, more efficient and safer.
Every car manufacturer in the world is trying to improve their cars with the latest technology.
...
2.4. Political Components
Introduction of paid parking
Every year more and more cities introduce paid street parking. The tool is well established in India as a means to improve traffic congestion, as well as a tool to combat parking violations and as a way to increase the attractiveness of public transport.
...
State programs
Since 2015, the government has partially compensated the cost of a car: 10% for most regions and 25% for residents of the Far Eastern Federal District. Assistance is provided for families with one child (or more) and for people who did not own a car. In 2020, two new programs have been launched. Now those who decide to take a car through trade-in and medical workers can count on the subsidy.
The program ""The first car"".
...
Family car program. The borrower has at least one minor child, including under guardianship and guardianship. It must be entered in the passport. The borrower has a valid driver's license, is an Indian citizen with permanent residence and an official place of work.
Program ""Car in trade-in"".
...
The program ""Car for medical workers"". The borrower has a document confirming his work in a medical organization of the state healthcare system. This may be a work book, a certificate of employment or another document agreed with the bank. The borrower has a valid driver's license, is an Indian citizen with permanent residence and an official place of work.
Coronavirus
...
2.5. STEP-analysis of the market
According to the results of the performed STEP-analysis, macro-environment factors have a negative impact on the development of the passenger car market to a greater extent.
Growth in car costs, fluctuations in exchange rates, GDP dynamics, traffic congestion, inconsistency with the needs of the new generation, falling incomes, and also the population negatively affect the market under study.
Only general trends in the development of the transport complex, the growth of car loans and support from the state, the development and implementation of innovative technologies have a positive effect on the car market.
Table 4. STEP analysis of factors influencing the passenger car market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
The global competition is the most developed in the passenger car market. The leader in sales of passenger cars in the world is the Toyota Group brand with a share of …%. Tracking how the world ranking of brands in terms of sales has been developing since 2010, experts note that throughout this period Toyota has constantly been in the lead.
...
Diagram 15. Shares of global competitors by the number of sales of new passenger cars in the world, Jan.-Jun. 2020, %
At the national level, in terms of the number of cars produced, the main competitors are JSC ""xxx"", ...
3.2. Number of competitors and relative market shares of the largest competitors
If we talk about the state of the automotive industry in India, then the situation here looks rather controversial. Among car owners, there is an opinion that has already become entrenched in the minds of more than one generation that the domestic auto industry has lagged behind the foreign one, and if it catches up with it in terms of technological equipment, it will not be very soon. Still, it's not all that bad considering the initial state of the industry.
The largest Indian player in this market, AvtoVAZ, was in a state of stagnation for a long time, but everything changed with the arrival of new foreign shareholders, the French automaker ...
The passenger car market in India is characterized by a low level of concentration (large number of operators with relatively small market shares, Herfindahl-Hirschman HHI <1000 - low concentration market).
At the end of 2019, the total revenue of the TOP-5 operators of the passenger car market amounted to …
Diagram 17. Dynamics of the total revenue of the largest operators of the passenger car market (TOP-5) in India, 2015-2019
3.3. Competition from substitute products
The need to move comfortably is the basic desire of any person. Previously, the most common option was to have a personal car. After the active development of taxi services and aggregators, travel scenarios appeared that make it possible to do without a personal car.
The cost of owning a personal car is increasing year by year. At the same time, public transport is rapidly developing - the MCC, MCD, metro and car sharing and taxi services, the regions are actively updating public transport fleets, primarily buses and electric buses.
Car sharing and taxis are a good alternative to a private car if you drive not far and infrequently. Car sharing is often considered as a replacement for a second car in the family for one of the working spouses, in combination with taxis and public transport. In addition, carsharing can replace a personal car for singles.
Rising prices for parking, rising prices for gasoline, car sharing advertising from everywhere, the development of car rental services by subscription - these factors can lead to a rethinking of one's own spending on transport and the search for alternative options for a personal car.
However, for the majority of Indians, it is still important to have your own car. With all its disadvantages and expenses, a private car remains the only adequate option for families with children, since child seats, scooters, bicycles, spare things, etc. are added with a child. And all this is easier to store in your car. In addition, a personal car (if it is insured) may well be considered an asset, since it can be sold at any time and converted into cash for investment, for example, in real estate or other large expenses. Taxi/car sharing/subscription expenses are irreplaceable.
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In the first half of 2020, many markets felt the impact of the pandemic and the onset of the economic crisis. Let us analyze data on the impact of recent crises on the car market (the global crisis of 2008 and the currency crisis in India in 2014).
...
The main difference of the current crisis for the passenger car market is the directive closure of dealerships. The covid-19 pandemic and restrictive quarantine measures have led to a sharp drop in income, which has also reduced the demand for passenger cars.
4.2. Analysis of the impact on the state aid industry at the current date
The Indian economy in February-March 2020 was under the powerful influence of two negative factors at once - the rapid spread of the covid-19 coronavirus infection pandemic and its detrimental impact on the global economy, as well as the collapse in oil prices. Against this background, the rupiah depreciated significantly against the dollar and the euro. In response to the situation, the government and the Bank of India have approved several packages of measures to support the economy and citizens.
The vast majority of the support measures announced by the president and the government concern only the industries that the government has identified as the most affected. That is, benefits apply only to legal entities and individual entrepreneurs whose main activity code (OKVED) specified in the Unified State Register (EGRLE) is included in the government list of such industries.
In April 2020, Indian President Vladimir Putin instructed the government to ensure the stable operation of the auto industry, from production to sale. He noted that all measures to support the Indian auto industry should be implemented in practice and as soon as possible. The President also called on the authorities and state-owned companies to purchase cars necessary for work, ""but by no means foreign limousines.""
“It is necessary to ensure stable rhythmic work throughout the entire chain of the auto industry and the automotive market: from the production of auto components to the retail sale of cars and their maintenance,” Putin said at a meeting on the development of the automotive industry.
...
According to the results of a survey by the Center for Strategic Research, businesses assess the sufficiency of the announced assistance as average.
The government has prepared a three-stage plan for economic recovery until 2022. A complete lifting of restrictions on businesses is scheduled for the end of 2021.
The government intends to implement the plan by the end of 2021 in three stages:
...
However, at the same time, it should be noted that the government's plans regarding the pace and timing of economic growth after the crisis quite often do not come true.
4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
Forecasting the development of the passenger car market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken.
...
It is also worth noting the changes expected in the automotive business in the medium term. Automotive and digital executives expect the following changes by 2025-2030, according to Automotive Industry Research:
...
The implementation of the scenario will depend mainly on the macroeconomic environment and government support measures.
4.3.2. Scenario of two quarantines
If the pandemic wave repeats in autumn 2020, real incomes of the population are expected to decrease to …%, the population will be afraid to spend money, unemployment will increase, demand will be concentrated on essential goods and services, which will further reduce the demand for cars. Most car owners will change to the subway, buses, etc.
Thus, according to GidMarket, if quarantine measures are repeated in autumn 2020, by the end of 2020, the growth rate of the passenger car market will decrease by …%. Possible re-closure of dealerships.
...
In times of economic instability, players who are customer-oriented and have developed competencies in a competitive and regulatory environment will benefit. Companies must clearly understand the needs of their current and potential customers, monitor trends, and analyze their behavior. This is what will allow us to formulate personalized, most relevant offers for both current and potential customers. Data will bring maximum benefit in the development of IT infrastructure, the use of specialized solutions, the formation of competencies (including data analysis) and the creation of a corporate culture of decision-making based on data. For many automakers and dealers, digital marketing is a new area in which processes and competencies have yet to be built. Partnerships with other players (including tech companies, startups, and between automaker and dealer) can streamline and speed up the process of creating a new feature.
4.4. Analysis of existing cases of business restructuring in the industry
Mercedes-Benz launched the car factory of the future
...
Go online
Automakers and dealers are testing new ways of contactless car sales during the pandemic. A drone delivering car keys to a customer's address is a new reality. The coronavirus epidemic has sparked interest in online car sales that eliminate the need to visit a dealership.
...
Advertising
Recently, Yandex has introduced a new format that should be present in the car dealer's media mix: digital outdoor advertising. It comes in two variations: Outdoor (DOOH) and Indoor. DOOH - advertising on billboards and billboards with the ability to collect the audience who watched the ad, in the future - setting up retargeting for these users. Indoor - advertising on small screens located in beauty salons, medical clinics and business centers.
It is also worth noting that video advertising is one of the fastest growing segments of the online advertising market. For car dealers, this tool is part of the mandatory program.
...
Thus, modern technologies make it possible not only to change the process of assembling cars, but also to attract and bring customers to purchase.
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 7-8 years
Industry dynamics in 2008-2009, in 2013-2019*
Dynamics of macroeconomic indicators over the past 8-9 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
India Customs databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2020-2024)
Diagrams
Diagram 1. Dynamics of the volume of the passenger car market, 2013 - 2019, million units
Figure 1. Industry life cycle stage
Diagram 2. Dynamics of the urban working-age population, 2015-2019, thousand people
Diagram 3. Dynamics of issued driver's licenses in India, 2015-2019, million people
Diagram 4. Dynamics of average per capita income of the population, 2015-2019, Rs.
Diagram 5. Volume of consumption in the passenger car market per capita, 2015-2019, pieces/1000 people
Diagram 6. Compactness of location of companies in the industry in certain regions, 2020
Diagram 7. Dynamics of India's GDP, % to the previous year, 2012-2 quarter 2020
Chart 8. Expert forecasts for a decline in real GDP in India in 2020 (baseline/neutral scenario), %
Diagram 9. Monthly dynamics of the US dollar against the rupee, Rs. for 1 US dollar, 2015-Sept. 2020
Diagram 10. Forecast of the dynamics of changes in the transport mobility of the population of India until 2024, passenger-kilometers per person per year
Diagram 11. Dynamics of growth in prices for AI-95 gasoline, 2015-July 2020, Rs./liter
Diagram 12. Dynamics of issuance of car loans in India, 2014-2019, thousand units
Diagram 13. Dynamics of the population of India, million people, as of 01 Jan. 2012-2020
Diagram 14. Dynamics of real incomes of the population of India, % to the previous year, 2012-1 half of 2020
Diagram 15. Shares of global competitors by the number of sales of new passenger cars in the world, Jan.-Jun. 2020, %
Diagram 16. Shares of the largest competitors in the passenger car market in 2019
Diagram 17. Dynamics of the total revenue of the largest operators of the passenger car market (TOP-5) in India, 2015-2019
Chart 18. Car use preferences after the pandemic, 2020 survey, %
Diagram 19. Forecast of the volume of the passenger car market in 2020 - 2024 – in case of a single quarantine scenario
Diagram 20. Forecast of the volume of the passenger car market in 2020 - 2024 – in the scenario of two quarantines
Tables
Table 1. Sales channels
Table 2. Expert forecasts for the decline in real GDP in India in 2020, %
Table 3. Comparison of car expenses in June 2020, thousand Rs.
Table 4. STEP analysis of factors influencing the passenger car market
Table 5. Main companies participating in the passenger car market in 2019
Table 6. Assessment of the impact of recent crises on the industry
Table 7. Analysis of the impact on the industry of the state aid proposed as of April 15.09.2020,
Table 8. Forecast indicators for the basic and pessimistic scenarios for the development of the crisis, %
All reports