Forecast: India’s car sales to surpass 2.6M units; more affordable small cars and new demand
A Business Monitor International (BMI) report forecasts that car sales in India will surpass 2.6 million units by the end of 2010, fuelled by an increasing number of affordable small cars and demand from less penetrated segments, such as rural areas.
Diwali celebrations and strong economic growth contributed to record car sales in India in October 2010. The 38% increase in car sales and 18% growth in commercial vehicle sales pushed total four-wheel vehicle sales for the first seven months (April to October) of the current financial year up 35% year-on-year (y-o-y). Although the levels of growth in October are unlikely to be sustained for the rest of the year to March 2011, BMI has revised its sales growth forecast for the financial year upwards to 25% for total four-wheel vehicles.
While rising raw material costs, which have led many carmakers to hike prices, provide a downside risk to the BMI forecast, Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (SIAM) notes that the number of month’ salary required to buy a car is falling. BMI believes this will provide some insulation against rising costs, but cautions that it will depend on the future movement of input prices.
Reports that South Korean Hyundai Motor will enter India’s light commercial vehicle (LCV) market, although unconfirmed, reflect a growing trend of global carmakers moving into what is a high growth segment, the report says. While BMI forecasts growth of 17.4% for the whole commercial vehicle market in India in the current financial year ending March 2011, LCVs look likely to outperform the wider segment, with sales up 29.7% for the eight months to August on a calendar year basis.
In line with BMI’s core view that emerging markets will become global production bases, BMI expects sustained double-digit growth in total vehicle exports over the next five years, averaging 13%.
Tags: business monitor international, car, indian automobile manufacturers, October, raw material costs, vehicle
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