India: The Next China

As far as total sales go, India is no China. 1.43 million units were sold on the subcontinent last year, a bit more than a tenth the cars the Chinese had consumed in the same year. But India is revving up quickly.

After a bit of a slow start in the beginning of the year, sales in India recorded more than 30 percent growth in the months between July and October 2010, says Hindustan Times. Car sales in India a rose 21 percent from a year earlier in November. December most likely will be no slouch either. Manufacturers announced price hikes for the new year, and people will want to lock in the deals.

India has a middle class of around 300 million people, with rising incomes. They all want a car. Manufacturers have sworn not to get caught sleeping again. In China, Volkswagen and GM together owned most of the market well into the new millennium.

In India, Maruti Suzuki holds a similar position and approximately 50 percent market share. However, automakers from Fiat to Bugatti are flocking to India to get their share of “the next China.”

China and India together have approximately one third of the world population. Both markets have just started to motorize. China has some 60 cars per thousand people. India has anywhere between 8 and 12 cars per thousand. The G7 average stands above 600 cars per thousand. The USA has more than 800 per thousand.

5 years ago, a study by LsSalle predicted that China would become the world’s largest car market by 2017. It happened in 2009.

The same study predicted that “over the next quarter century, emerging markets will replace the mature markets of America, Europe and Japan as the primary driver of sales growth and will account for 69 percent of industry sales and 87 percent of vehicle registrations.”

At least as far as the drivers of sales growth go, this prediction came true in 2009/2010. The rest will happen faster than we imagine.