sewells msxi adci report oct-dec 2016 edition

adciAutomotive Dealer Confi dence Index

11th Edition, Oct - Dec 2016

adci

SHAPING THE FUTURE OF AUTOMOTIVE RETAIL.

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TThe Indian automobile industry has had an exciting year in 2016. The industry started with a strong growth with new model launches by manufacturers aided by reduction in interest rates, roll-out of seventh pay commission and growth in rural demand.While the industry was expected to end the year with a strong growth trajectory currency demone-tization put brakes to its growth in the last quarter.In the new year, we are past the demonetization battle, and looking forward to the growth trajec-tory that we are used to. However our recent ADCI survey conducted during Nov Dec indicates that the Dealer Confi dence Index is down a few notches from the pre-festival season.

The truth is that the Indian automotive industry is here for the long haul and such distractions may be temporary. However it is equally important to understand the feelings in the short run. This report aims to capture and quantify the sentiment of the channel partners during the Oct - Dec quarter.

This report aims to capture and quantify the sentiment of various industry stakeholders to be viewed as reliable presursors to business performance. Hope you would enjoy reading through the pages of the eleventh edition of this report.

About Sewells MSXIAutomotive Dealer Confi denceIndex

ADCI Survey Methodology Summary of Respondents

SEWELLS MSXI

AUTOMOTIVEDEALERCONFIDENCEINDEX

1

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About Sewells MSXIAutomotive Dealer Confi denceIndex

A In the automotive industry, dealers enjoy a unique position which keeps them close to the customers. They are also in constant touch with factory sta , other dealers, fi nanciers and market intermediaries. Consequently, each dealer has exposure to a plethora of information that in turn shapes his/her views about the future of their business in short and medium term.

The Sewells MSXI Automotive Dealer Confi dence Index (ADCI) report captures and quantifi es this sentiment across the length and breadth of the country. The movement of this collective sentiment in the form of an index indicates the direction of the wholesale and the retail sales in the industry. It is published by Sewells MSXI on a quarterly basis.You have the eleventh edition of this report in your hands right now.

ADCI Survey Methodology Summary of Respondents

2

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ADCI Survey MethodologyAbout Sewells MSXIAutomotive Dealer Confi denceIndex

TThe Sewells MSXI ADCI is computed on the basis of responses received to a structured questionnaire from the automotive dealerships. The questionnaire attempts to capture their sentiment about economy in general and their business in particular on a six month horizon.As per the design, the ADCIs range is between -100 and +100, where an index score of -100 represents the most pessimistic outlook, and +100 indicates the most optimistic outlook. The index is based on how dealerships see the overall market and their businesses performing in next six months.

The Sewells MSXI tracks the trend of the index which o ers an insight into the future direction of the market. We believe that it is the movement of the index that o ers greater insights than its absolute value in a particular quarter.

In this latest edition of the ADCI, we have captured the sentiment of the automotive dealer fraternity during Oct - Dec quarter of 2016. The fi ndings of this survey are compared with the fi ndings of the previous three editions to map the trend.

As always, a questionnaire was sent to the automotive dealers across India. A total of 138 responses were received, from dealerships, representing 20 brands. These were used to compute the index. Every e ort has been made to ensure that the index is meaningful and representative of the dealer sentiment. However, we advise reader discretion in using the results considering the low sample in some cases.

Summary of Respondents

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ADCI Survey MethodologyAbout Sewells MSXIAutomotive Dealer Confi denceIndex

Summary of Respondents

TOTAL NUMBER OF RESPONDENTS

LOC

ATIO

N O

F R

ES

PO

ND

EN

TS

*Force,Mahindra,Tata and Honda are common brands across categories.

*Sub-sample size low. Reader discretion advised while considering the statistical signifi cance.

NORTH PASSENGER CARS

BEFORE 1975

PASSENGER CARS

YE

AR

OF

INC

OR

PO

RAT

ION

OF

DE

ALE

RS

HIP

8

4 4

SOUTH EAST WEST CENTRAL

20* BRANDS

TWO WHEELERS COMMERCIAL VEHICLES

BR

AN

DS

RE

PR

ES

EN

TED

20%

2831

79

138

57%

23%

COMMERCIAL VEHICLES PASSENGER CARS TWO WHEELERS

TWO WHEELERS COMMERCIAL VEHICLES OVERALL

1975 - 1989

1990 - 2004

AFTER 2005

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3

5%

17%

9%

65CITIES

35%

10%

29%

1

27%

71%

37%

9%1%

1%

1%

47%

16%

30%

61% 65%

29%

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The overall ADCI during Oct - Dec 2016 indicates that the dealers are moderately optimistic with the present business conditions in the country. Despite the festive season, dealer sentiment was not high due to low consumer spent on account of currency demonetization.

The overall ADCI stood at +23 indicating a slightly optimistic sentiment amongst the dealers. It is marginally high from the neutral sentiment.

The Passenger Car ADCI stood at +31, representing a moderate optimism in the dealers.

The Two Wheeler ADCI stood at +19, indicating a neutral sentiment.

The Commercial Vehicle ADCI stood at +12, also indicating a neutral sentiment.

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SEWELLS MSXI

AUTOMOTIVEDEALERCONFIDENCEINDEXOCT - DEC 2016 INDIA

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The index for Passenger Car segment stood at +31 during Oct - Dec 2016, as compared to +45 during Jul - Sep 2016, indicating a weakened optimism of the Passenger Car dealers.

The sentiment was also seen dipping for the Two Wheeler dealers, where the index was at +19 compared +32 at the end of Jul - Sep 2016 quarter.

Commercial Vehicle dealers sentiment also weakened in this period. In contrast to the last quarter, the index moved down to +12 vis-a-vis a high of +34 during Jul - Sep 2016 quarter.

SEWELLS MSXI

AUTOMOTIVEDEALERCONFIDENCEINDEX-TREND

6

OCT - DEC 2016 INDIA

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The following pages carry details of the responses received during the eleventh edition of the survey.

This section presents the distribution of responses across multiple questions and compared with the fi ndings of the previous surveys.

For better understanding of the analysis, we have added the re-spective questions on each page as asked in the survey.

SEWELLS MSXI

DETAILED ANALYSIS

AUTOMOTIVEDEALERCONFIDENCEINDEX

Current Economic Environment vis-a -vis same Period Last Year

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01Page 8

The Impact of Current Economic Environment on the Local Market

02Page 9

The Impact of Current Economic Environment on the Dealership Business

03Page 10

Dealership Performance vis-a-vis Same Period Last Year04

Page 11

Dealership Performance vis-a-vis Last Quarter05

Page 14

Expected Economic Environment Next Six Months Compared to the Present

06Page 17

Expected Market Performance Over Next Six Months

07Page 18

Expected Dealership Performance Over Next Six Months

08Page 19

Expected Dealership Performance Over Next Six Months Compared to the Present Level

09Page 20

Expected Manpower Strength Over Next Six Months10

Page 23

Dealers Opinion On How Does Vehicle Recalls by OEMs Impact Their Sales

11Page 24

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JUL -

SEP 2

016

100%

80%

60%

40%

20%

0%1CURRENT

LAST YEAR

ECONOMIC ENVIRONMENT VIS--VIS SAME PERIOD

Overall, 92% of the dealers felt that the current economic scenario in the country was negative.

Commerial Vehicle and Two Wheeler dealers were even more pessimistic about the economic environment as only 4% and 6% of them respectively saw any pos-itive indications.

PASSENGER CARS

OVERALL

100%

% O

F R

ESP

ON

DEN

TS

VERY NEGATIVE

TWO WHEELERS COMMERCIAL VEHICLES

NEGATIVE POSITIVE VERY POSITIVE

80%

60%

40%

20%

0%

8

7

71

202

5 7

74 64

APR -

JUN 2

016

JAN - M

AR 20

16

2

27

65

6

11

37

49

3

8

78

14

OCT -

DEC

2016

56

2910 14

82

4

77

6 171410

76

Survey Question

In your assessment, how is the current conomic environment in the country, vis--vis same period last year?

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2THE IMPACT OF CURRENT

ON THE LOCAL MARKET

ECONOMIC ENVIRONMENT

During Oct - Dec 2016 quarter, about 95 % of the dealers felt that the current economic scenario was not encouraging for their local market.

Of the total Passenger Car and Two Wheeler dealers, 94% had this opinion com-pared to 28% and 23% in the previous quarter.

None of the Commercial Vehicle dealers felt that current economic scenario had a positive impact on their mar