BRIC Spotlight Report
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Automobiles Sector in India: Fast Growth
October 2010
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Fast Facts
India is the second fastest growing automobile market in the world after China. Passenger vehicle production during the period April 2010 to August 2010 increased by nearly a third from a year ago. For the year ending March 2011, passenger vehicle output is expected to exceed 2.5 million. India is emerging as a major production base for small cars, with output expected to reach 3 million units by 2016. The country is building a reputation in designing and manufacturing low cost cars. Production of trucks and buses increased by nearly 66% between April 2010 and Aug 2010. An expanding highway network and overall economic growth is pushing up demand. India is the second largest market for motorcycles worldwide. Output of over 4.5 million units was registered during April 2010 – Aug 2010, marking growth of over 27%. The auto parts industry is also scaling up, as global car manufacturers are increasing their component sourcing from India, due to cost and engineering competencies. Competition is intense as most global firms have entered the market.

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nly three decades back, Indian car buyers had just two models to choose from. Both were local reproductions of European models that had disappeared from the western markets soon after World War II. Irrespective of market demand, manufacturing capacity was restricted through government licenses, and buyers had to wait several months after paying cash up front to get delivery. Imports were discouraged through very high duties, which remain high even now, and foreign-made cars were prized possessions of only the most affluent.

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Thomas White International Ltd

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