Monday, July 31, 2006

Automobiles...not light weighted

A serendipitous bump into statistics about Automobile industry took me by surprise. I did a little bit of surfing & digging to write this post.

To start with, a small comparison to understand how big Automobile Industry (US) is...

Top 10 Hollywood Movies in terms of collection so far are:
Titanic (1997)
Star Wars (1997)
Shrek 2 (2004)
E.T (1982)
Star Wars: Episode I - The Phantom Menace (1999)
Spider-Man (2002)
Star Wars: Episode III - Revenge os the Sith (2005)
The Lord of the Rings: The Return of the King (2003)
Spider-Man 2 (2004)
The Passion of Christ (2004)

The Total collection is $4,268,752,087.

Total sales revenue of one vehicle line (Ford F-Series) for one year (2004) in US was $28,185,330,000. [Sales of 939,511 units at an average sales price of $30,000]

Amazing, ain't it? Well, let us keep the comparison of profits aside.

In 2004, Total revenue from new vehicle sales in US is $270,000,000,000. This revenue is somewhere in between the GDPs of Columbia and Saudi Arabia in year 2004. They are ranked at positions 31 & 30 in terms of GDP that year.

As per year 2005 data, US is at number one in total number of cars & light commercial vehicles produced with 11,524,000 units. India is at 12th position with 1,406,000 units.

I never realized that US auto industry is this big. Now, I feel that I should have read Lee Iococca's autobiography, which is lying in my book shelf for a pretty long time. Another interesting fact is that new car sales revenue is going south in US in recent years whereas in India it is picking up for obvious reasons. I have always thought that in India, the sales revenue is more because of the first time car buyers. But that is not the fact. Major revenue comes from the buyers who buy their 2nd or 3rd car. Just one and a half years with my first car I have seriously started contemplating about my second car - UV type. Looks like this can be extrapolated to all car owners. The automotive market in India is going pretty steady, may be that is the reason why major to niche players in automobile sector are opening their shops in India. In a way I am happy that Chennai is becoming like what Detroit is for US. This may sound like a tall claim now, but the future is not too far.

Following is an excerpt from McKinsey's report:
In the span of a generation, India's automotive market has transformed a failing local industry into a thriving producer of reasonably priced, reliable small cars, some for export. Alongside the assemblers, successful component manufacturers and suppliers have developed. Still, while India's industry is booming, consumers, rather than investors, are reaping the greatest rewards. Read the rest from