India, Third Largest Automotive Market by 2020, Study Says

Currently ranked as sixth largest automotive market in the world, India seems to be on the right track to climb some further three spots in the coming years. In fact, the country is expected to reach third place by 2020, according to a study performed by JD Power and Associates.

The report is titled “India Automotive 2020: The Next Giant from Asia” and highlights that more than 2.7 million light vehicles were sold in India in 2010, compared to just 700,000 in 2000 and with increased economic activity and a widening population this number is expected to reach 11 million by 2020. This would make it the third largest behind China (expected to reach 35 million in 2020), and the USA (17.4 million).

The report also reveals that India’s government has pushed policies that support the development of its automotive industry. These include a reduction on the sales tax of small cars and financial incentives for car makers to build and export vehicles overseas. Many carmakers have thus decided to switch production operations to the country and designed vehicles specifically for the market.

“India has quickly become one of the largest and fastest-growing automotive markets in the world,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “This momentum has been driven by a more open and market-driven economy, an empowered and less risk-averse work force, a more consumer-driven culture and an emphasis on small car production.”

However, India is still seen as having three deficits: international trade deficits, chronic government budget deficits, and an underdeveloped power generation and distribution infrastructure.

Humphrey adds that the growth will depend on successfully creating the infrastructure to support its economy. “For India to build vehicles of high quality, and in large volumes—especially for export—significant improvements to the components industry will need to be made,” he said.
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