INDIAN THREE-WHEELER INDUSTRY

3W CargoFver
sales eclipsed by SCVs; Exports remain a key long-term growth driver
JUNE 2012

ICRA RATING FEATURE

Summary

Contacts:

India is the worlds foremost producer, consumer and exporter of three-wheelers (3Ws) with domestic sales of ~5.13 lakh units and
exports of ~3.63 lakh units in the financial year ending March 31, 2012 (Source: SIAM). 3Ws are widely used in India as an affordable
means of short-to-medium distance public transportation and last mile connectivity for goods transportation. Apart from the domestic
demand, India has also emerged as important export hub for 3Ws with presence in some of the South Asian, African and Latin
American markets that are replicating Indian 3W story with rising disposable incomes but inadequate public transport systems.
Overall, the 3W industry has witnessed relatively healthy 15% CAGR volume growth over the last decade driven by moderate domestic
growth (~10% CAGR) and robust exports growth (~38% CAGR).
However, the successful launch of four-wheeled Small Commercial Vehicles (mainly Tata ACE in 2005-06) has altered the industry
dynamics especially for the cargo segment, considerably over the last five years. While high tonnage (0.75T and above) 3W cargo
segment has already made way for 4W SCVs that provide higher stability, safety, speed, space and style; SCVs are gaining popularity
even in the lower tonnage (0.5T) Cargo and Passenger segments with introduction of some of the recently introduced smaller vehicles
by CV OEMs. While domestic 3W goods segment has de-grown at 9% CAGR, SCVs have reported robust 21% CAGR growth over the last
five years. Besides, slowing economic growth, moderating consumer goods consumption, high inflation, increase in financing costs,
rising fuel prices, absence of fresh permits by the state governments and overall high base has impacted domestic 3W passenger sales
in FY12. Overall, we expect the long-term sales growth to be the highest in the exports segment, followed by that in the passenger
carrier segment and the lowest in the goods carrier segment (due to intense competition from the SCV segment).

Table 1: Three-Wheeler Industry Sales

Domestic: 3W Passenger Carriers
Domestic: 3W Goods Carriers
Exports: 3W Passenger Carriers
Exports: 3W Goods Carriers
Total 3W Sales
Exports Contribution
3W Goods Carrier Contribution
Source: SIAM, ICRA Research

ICRA LIMITED

FY07
236,788
167,122
142,944
952
547,806

FY08
234,774
130,007
140,406
819
506,006

FY09
268,489
81,238
146,914
1,152
497,793

FY10
349,868
90,524
172,468
746
613,606

FY11
425,358
100,666
268,435
1533
795,992

FY12
406,236
107,015
360,736
2140
876,127

26%
31%

28%
26%

30%
17%

28%
15%

34%
13%

41%
12%

FY08
-1%
-22%
-2%
-14%
-8%

FY09
14%
-38%
5%
41%
-2%

FY10
30%
11%
17%
-35%
23%

FY11
22%
11%
56%
105%
30%

Exports remain the key growth driver

Goods Segment migrating to 4W SCVs

FY12
-4%
6%
34%
40%
10%

An jan G h o sh
+9 1 22 3 04 7 00 06
agh o sh @ ic rain d ia .co m

Analysts:
Su b r ata Ray
+9 1 22 3 04 7 00 27
su b rata @ ic rain d ia .co m
Sid d h arth Sh ah
+9 1 22 3 04 7 00 18
si d d h ar th . sh a h @ ic ra in d i a.co m

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