India’s Auto Market Will Not Reach Its Full Potential until It Overcomes Its “Three Deficits”: Trade, Budget and An Underdeveloped Infrastructure
NEW DELHI: 13 June 2011 — India surpassed France, the United Kingdom and Italy to become the sixth-largest automotive market in the world in 2010, and it is expected to become one of the three largest automotive markets in the world by 2020, according to a special report titled “India Automotive 2020: The Next Giant from Asia,” released by J.D. Power and Associates today.
More than 2.7 million light vehicles (passenger cars and light-commercial vehicles) were sold in India in 2010, up from just 700,000 light vehicles sold in 2000. Due to increased economic activity and a more consumer-driven culture that has developed during the past 20 years, India—a country with a population of nearly 1.2 billion—is expected to reach 11 million light-vehicle sales by 2020. This would make India the third-largest light-vehicle market in the world, behind China (expected to reach 35 million light-vehicle sales in 2020) and the United States (expected to reach 17.4 million sales in 2020).
Light-Vehicle Sales, 2010 vs. 2020
“India has quickly become one of the largest and fastest-growing automotive markets in the world,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “This momentum has been driven by a more open and market-driven economy, an empowered and less risk-averse work force, a more consumer-driven culture and an emphasis on small car production.”
Global Small Car Production Hub
In addition to policies favoring general market liberalization and encouraging foreign investment, India’s government has pursued policies meant to support development of India’s automotive industry. The main thrust of these policies has been to position India as a global hub for small passenger car production. These policies include a reduction on the sales tax of small cars (defined as those less than 4,000 millimeters in length and with an engine displacement of 1.2 liters or less), and providing financial incentives for automakers to build and export vehicles overseas. As a result, many automakers have been shifting their small car production operations to India, or designing vehicles specifically to fit Indian market needs.
In 2010, nearly 80 percent of all new passenger vehicles sold in India were classified as either mini cars or subcompact passenger cars. By comparison, the mini car and subcompact segments accounted for only 24 percent of passenger-vehicle sales in China in 2010, and just 3 percent of passenger-vehicle sales in the United States. ..... READ MORE
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