India topped as the fastest growing contender among the 5 leading automotive markets for light vehicles in 2018. Light vehicles are an umbrella term that includes cars, vans, utility vehicles, and mini trucks weighing less than 6 metric tons. Ford EcoSportis one of those LMV that has been a hit in the country and even the US-bound Ecosport is being exported from India.
According to the Deputy Managing Director of Toyota Kirloskar N. Raja, the motorization of India will continue gaining momentum. This is due to a contribution of two factors; a steady growth rate in the Indian GDP and a surge in the number of young buyers.
As per the IHS Markit report, the light vehicle market in India is estimated to have grown by 8.6% in 2018. It translates to about 4 million units. The Indian market was followed by Germany with a mere 0.8% growth. Japan finished third in the list with a growth rate of 0.6%.
While the USA displayed a saturation point with 0% growth rate, China showed signs of the first automotive recession in a decade with a negative growth rate of 2.7% (or a positive growth rate of -2.7%).
According to Gaurav Vangaal, the Senior Analyst at the automotive forecasting firm IHS Markit, the strong growth showed by the Indian automotive market will ensure that the major global automakers stay focused on India.
This is especially important when it is predicted that the global automotive market might soon face some drastic challenges.
News covered by Bloomberg News in December of 2018 reported that according to RBC Capital Markets, the global automotive market was heading for its first-ever decline in output since 2009.
Vangaal also noted that the vehicle makers were able to cope up with several challenges, such as an increase in interest rates and rupee depreciation, posed by the Indian automotive market thanks to the inherent structural demand of the automotive industry in India.
He also states that though 2018 was a rough year, 2019 will present its own set of challenges to the automakers aiming for the Indian automotive market. These issues range from the transition to BS-VI emission rules as well as strict safety regulations to general elections.
IHS Markit will need some time before releasing a detailed 2019 forecast. Nonetheless, the automotive forecasting firm gave a favorable prediction of the Indian automotive market some time not too long ago.
According to it, India will join the top three markets for light vehicles sometime around 2021. It will do so by outperforming Japan with an estimated sale of about 5 million light vehicles. In 2017, the Indian light vehicle market grew at a slightly lesser pace of 8.2%.
The growth in the overall Indian automotive market is slower than Brazil and Russia. Each country has seen a rise of about 12 to 14% in the automotive section. However, these markets are much smaller than the Indian automotive industry in terms of the sales volume.
India is holding down its position of the leading light vehicles market for two straight years now. This is more than impressive considering the fact that the Indian auto market faced a hostile macroeconomic situation of rising finance and insurance costs as well as uncertain fuel prices.
Whereas most of the developed economies are witnessing a growth saturation, emerging markets to the likes of Brazil, Mexico, and Russia are facing their own unique set of domestic challenges. Amongst all, only the Indian market has succeeded in achieving sustained growth.
In order to make the most out of the strong signs of growth showed by the Indian automotive market, many big names are entering into the country’s automotive industry.
Recently, Toyota Motor joined hands with Suzuki Motor to gain an upper hand in the Indian auto market. On the other hand, Ford Motor won a partnership with the homebrew UV maker Mahindra & Mahindra with the same intent as that of Japan’s biggest carmaker.
Ford Motor believes that India has the potential, thanks to its growing affluence, rise in economy and infrastructure, and increasing consumer base composed of young populaces, to become one of the two foremost automotive markets by 2030.