India is not a large car market by volume and just close to 3 million vehicles gets sold every year. By comparison, China sees sales of 21 million units a year. Still, 16 car manufacturers are present and a couple of more (including Kia) are waiting to enter.
It is, however, interesting that most of these companies (most of which are top global names) are struggling to maintain a low single-digit market share.
Top three players- Maruti Suzuki, Hyundai and M&M together control almost 73% of the market leaving the rest with a small 27% share. Then there are some who are barely able to make any impact.
World’s third largest automobile company GM today does not even have a one per cent share in the rapidly growing Indian market. Fiat beats GM with a mere 0.22% share. Skoda sits on a 0.40% share.
Still, companies remain hopeful and committed to the Indian market. Why is the Indian market so critical? Indian market is projected to grow to 5 million units by 2020.
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“India, like most emerging markets, has high growth potential. These emerging markets will drive 90% of future growth and most of this will come from the Asia Pacific region. The developed countries already have a high vehicle penetration and also an aging population. If an OEM does not remain focussed on emerging markets, its future growth will be under pressure,” said Abdul Majeed, partner at Price Waterhouse. But he added that for any player to gain market in India, a strong small car portfolio will be critical.
India has a lot of positive future growth triggers. India has a low car penetration of 17-18 per 1,000 populations, approximately one-tenth of global average. India has a large young population, a rising middle class to support future car sales. Car loans are easily available. The government’s thrust on growing the road network is another positive factor. Moreover, India has a well developed domestic auto component sector to support the growing volumes in a cost competitive manner.
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