India’s automotive sales surged the second fastest in the world in 2017, with total numbers trumping developed markets like UK and France and coming within striking distance of Germany.
Closing the last calendar year at 3.61 million units with a growth of 8.8 percent, India’s domestic automobile sales were the fifth highest in the world behind China (25.8 million), the United States (17.23 million), Japan (5.16 million) and Germany (3.71 million). Auto sales in the UK were at 2.9 million units, and in France were at 2.54 million units.
Brazil was the world’s fastest growing automobile market, registering a 9.4 percent year-on-year rise in volumes to 2.16 million units, according to data shared by London-headquartered business intelligence group JATO Dynamics.
From a gap of 378,000 units between itself and Germany in 2015, India is now just 96,000 units behind the European country in terms of annual automobile sales. Market estimates expect India to overtake Germany by end of this year on the back of sustained demand for compact hatchbacks and sports utility vehicles (SUVs).
However, on value terms India ranks far behind developed markets, including Germany.
Compact cars (under 4 meters) make up 75 percent of India’s passenger vehicle demand, which is more than most other developing and developed markets in the world. These small cars from Maruti Suzuki, Hyundai and Tata Motors, whose average ticket price is Rs 4.5 lakh, dominate India’s domestic passenger vehicle market.
On the other hand, Germany’s market is dominated by premium and luxury brands such as Volkswagen (VW), Mercedes, BMW and Audi. Models such as VW Golf, VW Passat, Mercedes C Class and Audi A4 are best-sellers there.
India’s automotive volumes, however, are higher than the combined volumes of Australia, Indonesia, Thailand and Malaysia, as of last year.
In 2017, India sold more automobiles than Brazil and South Korea put together, and even beat Germany and the UK for a few months to emerge as the world’s fourth largest vehicle market.
The country clocked total sales of 1.64 million units during January-May this year, beating European heavyweight Germany, which saw sales of 1.60 million units during the same period.
Lower penetration levels, improving road network, greater buying abilities and addition of several new models have resulted in the Indian market beating its peers in terms of growth in new car sales.
In India, there are only 32 vehicles per 1,000 people, compared to around 800 vehicles per 1,000 people in the United States, formerly the world’s biggest vehicle market. This is the reason why new mass market brands such as Peugeot, Kia and SAIC have announced plans to enter India by 2020.
Suzuki Motor Corporation, the parent company of Maruti Suzuki, expects India’s car market to become the third largest in the world by 2020. As per estimates, India’s passenger vehicle demand will grow to more than 6 million units by 2020.
In luxury cars, India is one of the smallest markets in the world, with volumes of 39,000 units as of last year. It pales in comparison to China, which saw more than 1.65 million units sales of luxury cars last year.