Sell In To The Indians: India To Become World's Third Largest Auto Market By 2020
A lot has been said about the new car potential of populous India. This time, they mean it, says J.D. Power. India surpassed France, the United Kingdom and Italy to become the sixth-largest automotive market in the world in 2010. In 2020, India is expected to become the world’s third largest auto market. This according to a special report titled “India Automotive 2020: The Next Giant from Asia,” released by J.D. Power and Associates.
More than 2.7 million light vehicles (passenger cars and light-commercial vehicles) were sold in India in 2010, up from just 700,000 light vehicles sold in 2000. J.D. Power expects India to reach 11 million light-vehicle sales by 2020. This would be what Americans bought last year. It would also make India the third-largest light-vehicle market in the world, behind the United States, which J.D. Power projects to return to its former glory of 17.4 million sales in 2020. By that time, J.D. Power expects the Chinese market to reach 35 million light-vehicle sales, double the projected number of the U.S.A.
What is standing in the way of even higher motorization of India? It’s India’s “three deficits:” Continual international trade deficits; chronic government budget deficits; and an underdeveloped power generation and distribution infrastructure. According to J.D. Power, “the country’s lagging infrastructure poses the biggest potential obstacle to future growth.”
Readers who pay attention may think J.D. Power’s numbers are a bit off. India’s 2010 numbers had been reported as 1.87 million, J.D. Power says it was 2.7 million. The official Chinese number for 2010 was 18.06 million, J.D. Power says it was 17.2 million. Where is the confusion? The 1.87 million reported by the Wall Street Journal for India omitted commercial vehicles. The Chinese number includes commercial vehicles. J.D.Power attempts to replicate the American “light vehicle” count, which often is not officially tracked in other countries. Cars classified as “commercial vehicles” (trucks, vans, etc. can have a large impact on the count, especially in emerging markets, but also in the U.S.A. Please refer to my treatise on car counting. And watch out for some wire services, notably the Associated Press, that blatantly report wrong numbers when it comes to pass.
TTAC’s position is that in absence of hard light-vehicle data, the total of all automobiles should be taken. It is much closer to the light vehicle count than passenger vehicles. And most of all, it is the number which the world’s car counting authority OICA uses.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Of all the BRIC countries, India is the one I will mostly stay away from. China is the only one that will become really successful as proven by Chinese enclaves Macau, Hong Kong, Singapore, Taiwan and Chinese everywhere. They are successful wherever they go. They are the single wealthiest ethnic group in the whole of Southeast Asia. At least Russia and Brazil have vast oil reserves to save their lives.
I have a hard time imagining this. Indian cities are just clogged right now. The only argument for having a car is the commute across town is 2 hours is in air conditioning rather than a a scooter or bus. Yes, you can blow up some slums and build expressways, but they still can't handle a volume of traffic that this would entail. Where is India going to import the gasoline or diesel? And even if you go hybrid or electric the power system can't handle it. Hell, just moving cars on trucks on Indian roads is a nightmare. I see a bright future for Indian trucks. But the more trucks on those roads the harder it is for cars. It is already bad, and wait until those new roads falls apart because of truck traffic in five years.