The Indian auto industry, worth US$ 34 billion in 2006, has grown at a CAGR of 14 per cent over the last five years with total sales of vehicles reaching around 9 million vehicles in 2005-06. That number is likely to see a significant boost, given that the first half of 2006-07 has already witnessed a staggering growth rate of 17.12 per cent. Domestic car sales for the April-September 2006 period stood at an impressive 4.86 million vehicles, including cars, two-wheelers and commercial vehicles. According to industry experts, if this trend continues, sales could touch 10 million by March 2007, clocking an annual growth rate of 20 per cent. In addition, the Government's announcement to cut excise duty on small cars will soon see India emerging as the world's largest manufacturing hub for small or compact cars.
Destination India
India is on every major global automobile player’s roadmap, and it isn’t hard to see why:
· India is the second largest two-wheeler market in the world
· Fourth largest commercial vehicle market in the world
· 11th largest passenger car market in the world
· Expected to be the seventh largest by 2016
Robust production
India’s car production capacity is in for a US$ 2 billion boost. Auto majors have announced massive investment plans which will push the country’s car production past the psychological 2 million mark by the end of fiscal 2006-07, up 70 per cent from 1.4 million units now. Even at 2 million, India, which stood at No.11 among global car producing nations, will move two steps ahead, past UK (1.6 million) and Canada (1.35 million). It will be neck and neck with Brazil’s 2-million capacity at No.8. The automobile industry witnessed a growth of 19.35 percent in April-July 2006 when compared to April-July 2005, as is evident from this year’s production trends.
Increased affluence, wider selection and the ready availability of car loans is driving the Indian car market through the roof. During the last five years (2000-05), the production of passenger cars in India increased by more than 100 per cent. India achieved the sales of 1.11 million vehicles last year (2005).
Domestic sales have been growing at a clipping pace:
· Passenger car sales rose by 22.84 per cent during April-September 2006, compared to the corresponding period last year.
· The cumulative growth of overall sales of passenger vehicles during April-September of 2006-07 was 20.73 percent.
· Utility Vehicle (UVs) sales grew at 12.85 per cent during the same period.
· Overall, the two wheeler market grew by 15.49 per cent during the April-September period of financial year 2006-07, over the same period last year.
· Motorcycles grew by 18.53 per cent, scooters at 0.12 percent and mopeds at about 6.53 percent over April-September 2005.
· Three wheeler sales grew at 19.90 per cent. Goods carriers grew by 26.16 per cent and passenger carriers grew at 15.78 per cent during the April-September 2006 period, over the same period last year.
· Overall, the commercial vehicles segment grew at 36.96 per cent. Growth of Medium and Heavy Commercial Vehicles was 39.92 per cent. Light Commercial Vehicles also performed well with a growth of 32.86 percent.
