Sector Update - CENSUS 2011- Auto Sector Update - PINC Research

Census 2011 - An Insight Into Automobile Ownership

Analysing the data on the mode of transportation under the recently conducted Census 2011 threw up interesting facts related to automobile ownership in the country. Some of the salient points are summarised below.

Bicycle penetration stagnant: The penetration of bicycles as a mode of transport has been stagnant over the last decade. On a pan India basis, household penetration for bicycle inched up marginally from 43.7% to 44.8%. In urban India the penetration for bicycle actually declined from 46.0% to 41.9%. Among the larger states Uttar Pradesh and Punjab have a penetration level of 60% plus.

Two Wheeler growth driven by Rural India: Household penetration of two wheelers on an all India basis increased from 11.7% to 21.0% over the decade 2001-11. However, there is a stark difference between the growth recorded in rural India as compared to urban. While two wheeler household penetration in rural India more than doubled to 14.3%, the growth in urban India was more sedate growing from 24.7% to 35.2%. Growth in rural India has been more or less uniform with above average growth has been recorded in the North Eastern states and Bihar.

Household penetration for passenger vehicles almost doubles: Contrary to the increase in penetration of two wheeler, the growth in passenger vehicles (PVs) is uniform across rural and urban India. On a pan Indian basis four wheeler penetration jumped from 2.5% to 4.7% over 2001-11. In the urban India household penetration for PVs stood at 9.7% while in the rural region it was at a mere 2.3%. Among the larger states Rajasthan, Gujarat, Karnataka and Maharashtra have shown a high penetration level for PVs.

Ownership of multiple vehicles estimated to account for 10% of volumes: Considering the household penetration level of 4.7% on an all India basis for passenger vehicles, we derive a vehicle population of 11.6mn units. However, as per the industry data available 13.4mn vehicles have been sold over the ten year period of 2001-2011.A portion of the 13% difference could be explained by ownership of multiple PVs in a household.

PINC Views: The data available under the Census 2011 reaffirms our view on the automotive demand in the country. The demand for two wheelers would continue to be driven by the rural India as penetration levels continue to remain low at 14.3. For passenger vehicles there would be an equal demand pull from both rural and urban India as penetration levels are low in both the regions. The geographical demand is expected to change over the forthcoming decade. The large eastern states namely Bihar, West Bengal, Odisha and Andhra Pradesh could be the drivers of growth over 2011-21 as prosperity percolates to these regions. Also considering that on a pan India basis 80% of the households still do not own a two wheeler and 40% of the population have no mode of transport, saturation in demand for two wheelers is still some years away.

Source : Equity Bulls

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