Booz & Co Predicts: U.S. To Stagnate, EU And Japan To Crash, India #4 in 2015

A study by Booz & Co, that calls itself “one of the leading management consultancies in the world,” predicts that India will be the world’s 4th largest car market by 2015 and will surpass the European Nations by 2015. I don’t doubt that India is a very important market with great growth potential. But Booz & Co must have consumed too much of its namesake.

Let’s check again. “Our research portrays that with the rapid expansion of the automotive industry in India, it is expected to surpass the European nations by 2015 and generate sales up to 6+ millions units annually by 2020. With China and India ramping up in parallel directions, the global auto industry is sure to get reshaped, thus propelling Asia to capture 65% of the total market size by 2020,” indeed said Vikas Sehgal, Partner, Booz & Company, India.

Really? Well , as chronicled in out yearly review of car sales around the world, 2010 new car sales rose 31 percent to 1.87 million in India. Assuming the same 37 percent growth rate for each year, India would reach 6 million plus by 2015. Setting the target to 2020 is conservative.

These are the Top 5 in 2010 by sales

With 1.87 million, India is far removed from the Top 5, we won’t even bother to list how far. Now looking at the list, Booz makes an assumption that is even more revolutionary: If India is the world’s 4th largest car market by 2015, then Booz must assume that Brazil will be in #3 by 2015. Looking at Brazil’s numbers, that is entirely possible.

The graph above says (even more shocking) that Booz assumes exactly zero growth for the U.S. car market from 2014 on out.

But surpassing the European Nations by 2015? Our review of 2010 car sales says that in the EU, sales had dropped 5.5 percent by 2010, but still stood at 13.36 million units. If the EU, which shares common borders and to a large degree a common currency, would be counted as one market, it would be the world’s second largest car market, eclipsing the U.S.

If Booz thinks that India will surpass the EU by 2015, and generate sales of 6 million or more by 2020, then logic dictates that Booz thinks that the EU and Japan will implode. The EU would have to be in place 5 with maybe 3 million, and Japan would be relegated to place 6 with maybe 2.5 million. Ain’t going to happen, at least not that fast.

One sometimes wonders who pays money for studies that have been made under the influence. You know what’s worse? The number of media outlets that reprint this garbage without checking.