In the next few months India will join a select club of countries that buy over a million (more than 10 lakhs) cars a year. The dozen-odd million-car markets include Japan, the US, France, Germany, Spain, South Korea, Brazil and China.
In April-February 2003-04, sales of passenger vehicles in India stood at 802,916. For the whole year, car sales are expected to be close to 900,000. With carmakers projecting growth of at least 10-15 per cent for 2004-05, the number is set to cross 1 million some time in 2004-05.
"If current growth rates for industry persist, passenger car sales will cross 1 million in 2004-05," an executive at Maruti Udyog, the country's largest car producer, told Business Standard.
Sales are expected to be driven by higher GDP growth, easy credit and higher disposable income. Carmakers see the bulk of sales in the compact and mid-size car segment.
Hyundai Motor India President BVR Subbu said compact cars would drive sales. The mid-size segment could also notch significant growth with models at different price points, especially below Rs 500,000, like the Ford Ikon, Tata Indigo, Maruti Esteem and Opel Corsa.
Tata Motors Vice-President (passenger vehicles) Rajiv Dube said the industry should cross the 1 million mark in 2004-05 but added that high taxes on cars were an impediment. "Once rationalisation takes place, certainly there will be more growth," Dube said.
KPMG associate director (automotive practice) Sanjay Upendram added, "We should see more cars in the compact segment like GM/Daewoo, Suzuki and Hyundai."
General Motors India Vice-President (external affairs) P Balendran said, "India is a price sensitive market and that can be seen from the phenomenal performance of Maruti 800 even today. If we have a cost-effective car, there is a huge base of two-wheeler owners who will scale up."
An analyst with an international broking house pointed out that oil prices and emission norms were also factors in determining the size of the car market.
He said India's advantages lay in producing small cars and emerging as a sourcing base for such products worldwide.
According to Parvathi Krishnakumar, auto analyst with Karvy Stock Broking, the growth will come from smaller towns and cities through low-priced models like the Maruti 800 and utility vehicles.
