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India become fourth-largest auto market

Auto News - Published on Tue, 15 Jan 2019

Image Source: MBA-Aspirants
Financial Times reported that India has displaced Germany as the world’s fourth-largest market for vehicle sales by volume and is on track to take the number three position from Japan within three years. Commercial and passenger vehicle sales in India grew 8.3 per cent last year to 3.99m, overtaking the 3.74m of sales in Germany, a market that grew less than 1 per cent, according to data from LMC Automotive, a market intelligence provider.

McKinsey has projected that India is poised to overtake Japan as the third-biggest market by 2021, as the country of i.2bn people grows more than 7 per cent a year, while Japan’s larger economy flatlines.

Mr Basudeb Banerjee, an automotive analyst at Ambit Securities, said that despite the surging volumes in India, the low selling prices meant it was far from being one of the most lucrative markets for global carmakers.

The average selling price for passenger cars in India is about $7,000, Mr Banerjee estimated roughly a third of the level in major developed markets. Mr Banerjee predicted that Car sales volumes in India are still dwarfed by those of motorbikes and scooters, which are commonly used to transport goods and families, with sales of 20.2m units last year. But car sales were likely to continue growing at about 6-8 per cent a year, in line with broader economic growth.

German carmakers, which dominated China’s rapid growth as it rocketed to the world’s largest market over the past three decades, appear unprepared for the shifting landscape. With few entry-level offerings, their share in India’s fast-growing market is about 1 per cent, versus 69 per cent in its home market and 22 per cent in China, according to the German Association of the Automotive Industry.

India’s car market has lots of capacity for further growth. Fitch estimated that car density' measured by the number of passenger cars per 1,000 people — was just 27 last year, versus 145 in China and 570 in Germany.

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Posted By : Joykumar Irom on Tue, 15 Jan 2019
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