When we have a look at the efficiency of the worldwide automotive business in 2022, India (together with the ASEAN area) has been a uncommon vivid spot, bolstering gross sales. The results of the pandemic are regularly dissipating and resulting in a rebound in GDP and personal consumption. This helped drive pent-up demand, whereas additionally giving automobile makers the boldness to introduce new fashions out there.

Plus, enhancing provides of semiconductors have allowed OEMs to ramp up output to fulfill pending orders of an estimated 850k items, most of that are Passenger Vehicles (PVs). The market’s progress driver has additionally shifted from cheap entry-level vehicles to SUVs, regularly purchased by extra prosperous shoppers, which is one more reason why gross sales are holding up nicely.

Therefore, Light Vehicle (LV) gross sales within the 12 months to October climbed by 25% year-on-year (YoY) to three.70 million items, regardless of larger automobile costs and rates of interest. Sales are projected to have reached a report excessive of 4.41 million items (+25 YoY) in 2022.

After such phenomenal progress final 12 months, the market is predicted to gradual to a 5% progress fee in 2023 on gross sales of 4.64 million items. We assume that a lot of the pent-up demand and pending orders can be largely fulfilled over the approaching few months, albeit with new mannequin launches persevering with to generate massive volumes of bookings.

India can even be going by way of its subsequent part of stricter security and emissions laws from 2023 onwards. This, coupled with rising uncooked materials prices, will additional push up automobile costs in a extremely price-sensitive market. This might delay the entry of latest consumers into the market in addition to gradual the conversion of two-wheeler customers to 4 wheels.

In the long run, we forecast the Indian market to broaden at a CAGR of solely 2% over the following decade, with gross sales anticipated to achieve 5.52 million items in 2032. This progress compares to a CAGR of 5.5% throughout the pre-pandemic decade (2009 to 2019).

Our conservative outlook is partly influenced by growing world headwinds which might affect the Indian economic system. Moreover, we imagine that, as the bottom turns into bigger, will probably be more and more tough for the business to repeatedly publish sturdy double-digit progress charges.

That mentioned, India nonetheless possesses excessive gross sales progress potential, as PV density continues to be very low, estimated to be solely 40 items per 1,000 adults at current (evaluate this low determine with Western Europe at 650 items per 1,000 adults). Intensifying competitors amongst automakers is resulting in an growing variety of inexpensive and enticing fashions. This ought to proceed to spur curiosity amongst shoppers. As such, there’s a likelihood that the market will shock on the upside.

Ammar Master

This article was first revealed on GlobalData’s devoted analysis platform, the Automotive Intelligence Center