India auto industry update (Part 1)

As a provider of dealer management systems to vehicle dealerships in several emerging markets, we closely follow what is happening in the auto industry in key regions around the world. I thought it might be interesting to share some of that information.

When pondering where the main opportunities lie in the automotive industry, we automatically think of China.

However, India is also a huge market that presents an incredibly promising scenario.

The Indian internal market will be the fastest growing among auto producing nations over the next five years, and the second fastest among all nations (behind China). The main growth in India will be in light vehicles: vans, small trucks and compact cars.

In India, seven people per 1,000 own a car. Compare that to 450 in the U.S. and 500 in Western Europe and you get an idea of the market potential. And the demand is there. India's middle class continues to grow, currently standing at 216 million. About half of India's 1.1 billion people will be between the ages of 15 to 49 at the end of the decade.

Car sales in 2006 were up 22 percent, reaching 1.076 million units, helped by interest rates that have fallen by 50 percent in the past five years. And sales are expected to grow at least 10% annually until 2010.

Exports are also expected to grow significantly. In 2006 only 200,000 were exported, but that number is expected to reach one million by 2010. Hyundai, the second-biggest carmaker in India, leads the way here.

Mini-cars represent around 70% of the auto market in India, roughly 1 million cars. This is where the main push looks to be coming from most manufacturers.

Until 15 years ago, and after decades of protectionism, there were only a handful of auto manufacturers in India:

• Maruti Udyog. They make around 50% of the cars used in India today.
• Hindustan Motors
• Premier Automobiles
• Tata Motors

That changed in 1991, and now, of course, all of the major manufacturers are vying for entry.

GM, Honda, Volkswagen, and a half dozen other auto companies have announced investments of over $6 billion on new factories. Fiat, Nissan, and Renault are also in the game, but their strategy is to link with local manufacturers.

More on the India strategy of each manufacturer in upcoming posts.

Posts in this series:

• Part 1: Overview
• Part 2: GM in India
• Part 3: VW in India
• Part 4: Honda in India
• Part 4b: Honda in India, two-wheelers
• Part 5: Ford in India
• Part 6: Renault-Nissan in India
• Part 7: Maruti Suzuki in India
• Part 8: Hyundai in India
• Part 9: Toyota in India
• Part 10: Tata Motors in India

Tags: India, auto industry, automotive industry, GM, Renault, Nissan, Volkswagen, Honda, Maruti, Fiat, Hindustan Motors, Tata Motors, Premier Automobiles

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Comments

[Al]

You're right, thanks. I've fixed it and this is the correct link:
http://www.thelightisgreen.com/2007/05/india_auto_indu_1.html

[A.S.]

The link for Part 2: GM in India doesn't seem to work.

Quite an informative series, thanks!

[L.Girish]

Very informative & great to know about the future growth in Automobile Sector.
L.Girish
National Sales Manager
Mapal India Pvt Ltd
Mob-09342204776
www.mapal.de