The automotive industry is one of the hardest-hit industries due to the current pandemic. COVID will change consumer behavior in significant ways. More and more consumers are willing to move away from public transportation to private transportation. For instance, in a recent survey conducted by PGA Labs in South East Asia, 52% of respondents said that they will increase usage of private cars and 38% said they will increase the usage of 2W compared to pre-COVID levels. In the medium term, this consumer behavior shift to owned as well as increased usage of private vehicles will fuel demand for the automotive industry.
Global automotive exports overview: Increasingly global supply chains
Global production of vehicles in 2019 was 91.8M units excluding two-wheelers and three-wheelers, registering a CAGR of 0.3% over 2015-19. China at 28%, USA at 11.9%, and Japan at 10.6% were the largest Automobile manufacturers accounting for 50.4% production in 2019. India ranked fifth contributing 4.9%. Global production peaked in 2017 to 97.3M and declined 1.7% in 2018 and 4% in 2019 triggered by US sanctions, a fall in sales in China, and exacerbated by harsher emissions regulations. Despite low growth in production, Automotive exports have grown at a higher CAGR during the same period as supply chains have become increasingly global.
Global automobile exports excluding 3Ws, were valued at US$ 1.0T in 2019 registering a CAGR of 3.7% during 2015-19 while India’s automobile exports stood at US$ 10.9B in 2019 and grew at CAGR 5.2% during the same period. PVs were the largest segment in global Automobile exports comprising 75% followed by CVs at 14%. The growth was in part driven by increasingly conducive Government policies. Also, India is the fifth largest 4W market and largest two-wheeler market in the world.
In 2019, global Auto components exports were valued at US$ 406B and had registered degrowth at CAGR 2% over 2015-19. Indian auto components exports grew at a CAGR 5.7% during the same period and were valued at US$ 6.5B in 2019 despite degrowth at the global level.
India’s share in global Automotive exports was 1.2% in 2019, up 10bps compared to 2015. Europe is the leading auto exporter in the world with a share of around 50%, followed by Asia at 24% and North America at 21%.
Exhibit 1: Indian auto exports have grown at a 1.5X growth rate of global average in the last five years