Automotive sales growth in India

As per Felipe Munoz (2018), the growth in the automotive industry for selling vehicles has been rapidly rising in the first half of the year 2018. Jato conducted a world survey for 57 markets where the collected data indicated a sales growth of 44 million units. Even though the result is positive, it is also synchronized with the global economy with some uncertainty is prevailing due to the trade war which is very much potential among the biggest economies. Nonetheless, the three main factors that boosted the vehicle market are:

  • The USA with an economic mood which is good.
  • Europe with an improved indicator.
  • China with an economy that is expanding continuously.

Although these three markets played an essential role in the market as per the result in quarter 1 of 2018, India emerged as an essential overachieving market in the auto industry for its sales growth. The data collected by Jato for 29 states and 4 union territories showed an increased growth with double digits in 27 states. India outsold Germany, became the 4th largest vehicle market after Japan, USA, and China and it is expected that by 2021 India will outshine Japan in vehicle sales.

In figure 1, the top 10 markets for selling vehicles have been shown for the year 2018 in quarter1. As it can be seen, China is in the global leadership position with the highest number of vehicles sold, but still, they are facing some tough struggles with the trade barrier problem with the USA which is quite uncertain over the impact for the global economy.

In figure 2, the analysis of the top 10 countries has been represented with the number of units sold in 2018, and in figure 3, the growth rate has been indicated concerning 2017. It can be seen that in India and Brazil there have been an increase in vehicle sales of 16% and 14% concerning 2017, making a clear indication of the rapid growth and thereby making both the countries an essential area for the automotive industry.

As per Tiku, P. (2008, pg.14), India is considered to be one of the six sizzling nations for an investment opportunity. Being part of BRIC where there is a potential risk in terms of liquid availability in a lesser number compare to the advanced market such as Western Europe and The United States. Developing markets possess, high potential in terms of high returns over a long-period than their accomplished counterpart and hence it is attractive even with a high risk.  With the right combination of a mix with investments of other types, they mitigate the potential risk to an extent by providing a good return over time.

A survey conducted by VDA to study the largest automobile markets based on new car registrations during the period from January to December 2018 shows the following results:

The analysis shows that in the Asian region, India is holding third place with the highest number of new cars registered from January to December in 2018.

In another survey conducted by OICA (Organisation Internationale des Constructeurs d’Automombiles) during the period of 2018, an estimated passenger car production for selected countries showed India in the 4th Position with 4.06 million units of the car being produced.

Not only, India is just a domestic market but it has made a huge global presence for its export growth also. In the next figure, the current growth rate for passenger car export from 2008 to 2018 has been shown, a survey conducted by SIAM India.

The below figure, shows the estimation done for the automobile industry for the Indian market. The estimation is done for sub-industries from India where the below chart has represented the total number of establishments and the sales in millions. As we can see, the graph shows a good number in the sales figure where the Motor vehicles and car bodies got a sales figure of 15860 Million dollars and 464 established industry. The second industry is the automobile assembly with a sales volume of 13,940 Million dollars and 430 established industry.

Sources:-

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