With 4.25 million new vehicles sold, India outpaces Japan as world's third-largest auto market

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Moneycontrol could not independently verify the report.

The report further said that India’s sales volume is expected to rise further with the inclusion of pending fourth-quarter sales figures for commercial vehicles, along with year-end results yet to be released by Tata Motors and other automakers.

In 2021, China continued to lead the global auto market, with 26.27 million vehicles sold. The US remained second at 15.4 million vehicles, followed by Japan at 4.44 million units.

Nikkei Asia added that India’s auto market has "fluctuated in recent years." Roughly 4.4 million vehicles were sold in 2018, but volume dipped below 4 million units in 2019, due primarily to the credit crunch that hit the nonbank sector that year.

Vehicle sales fell even lower than the 3 million-unit threshold in 2020 when the COVID pandemic prompted a nationwide lockdown. Sales bounced back in 2021 to close to 4 million units, although growth was hampered by the lack of automotive chips, the report highlighted.

In India last year, petrol-powered vehicles, including hybrids, made up the majority of new car sales, Nikkei Asia said, adding that electric vehicles hardly have a presence. Autos for the Indian market are seen having fewer semiconductors than those sold in advanced economies.

In 2022, the automotive chip crisis began to ease, which served as a launchpad for a comeback. Along with Maruti Suzuki, Tata Motors and other Indian automakers saw sales grow during last year.

Additionally, post India's muted December auto sales due to seasonally weak quarter, brokerages expect stronger growth in the PV segment in the upcoming one, Q4FY23. LKP Securities said it believes the fourth and the last quarter of the year to witness stronger growth in the PV segment as the chip shortage issue eases further and new launches on both ICE (internal combustion engine) and EV sides do take place. "Seasonally too, Q4 is a good quarter. Two-wheelers shall further gain strength on low base of last year, EV launches and good monsoon leading to better rural demand on the back of solid Rabi crop," adding, "We remain positive on the entire automobile sector."

Similarly, providing its top picks in auto stocks, IDBI Capital stated, Mahindra & Mahindra is well positioned to address the turnaround in Indian PV market, new launches of two-wheeler (2W) players are expected to performance in 2023. Sona Comstar is expected to benefit from growth momentum in EV industry.

"The Light vehicle numbers are yet to be updated with actuals. However, we are aware since the last two years it’s been a supply-driven market as there was no dearth of demand. In 2023, we expect Japan & India again expected to be neck to neck in this race," said Gaurav Vangaal, Associate Director, S&P Global Mobility.

India is home to 1.4 billion people, and its population is expected to outstrip China sometime this year and continue growing until the early 2060s. Incomes are rising as well, Nikkei Asia stated.

However, with the booming population, only 8.5 percent of Indian households owned a passenger vehicle in 2021, according to British research firm Euromonitor. leaving plenty of room for sales growth. To pursue that, the Narendra Modi-led government has kickstarted offering subsidies for EVs amid a trade deficit resulting from petroleum imports.

The report also said that the omicron epidemic and the lockdowns in China greatly undercut production, leaving automakers unable to meet demand.

Japan’s auto sales peaked in 1990 at 7.77 million units, meaning sales have tumbled by nearly half from the all-time high, according to Nikkei Asia. The country’s declining population offers little prospect for a significant recovery in sales in the foreseeable future, it added.

(With agency inputs)