India represents one of the world’s largest automobile industries. Easy availability of finance and rising income levels are encouraging the middle class population to upgrade their two wheelers to a car. Besides, the growing organised used car market has also been a positive growth factor in the used car market of the country. Driven by the above factors, the used cars market is anticipated to grow at a compound annual growth rate (CAGR) of 16 per cent during 2013–17, highlighted the RNCOS report titled, ‘Booming Used Car Market in India Outlook 2017’.
India is quietly becoming a production hub of high-end vehicles meant for export to China. The US-based motorbike maker Harley Davidson, Austrian motorcycle manufacturer KTM and Mahindra & Mahindra have also preferred to set up manufacturing facilities in India than in the relatively low-cost China and export the output.
Furthermore, India is set to become Mercedes Benz’s fastest-growing market worldwide ahead of China, the US and Europe, according to internal projections. We expect growth rates to be the fastest in India globally, and expect sales to move up by 10 per cent over the next five years or so, as per Mr Matthias Luhrs, Vice-President (Global Sales), Mercedes Benz Cars.
The passenger vehicles production in India touched 3.23 million units in 2012–13 and is expected to reach 10 million units by 2020–21. The industry is estimated to grow at a CAGR of 13 per cent during 2012–2021. In addition, the industry recorded exports worth US$ 9.3 billion in 2012–13 and is projected to touch US$ 30 billion by 2020–21, according to data from Automotive Component Manufacturers’ Association (ACMA).
The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during April 2000 to October 2013 was recorded at US$ 9,079 million, amounting to 4 per cent of the total FDI inflows (in terms of US$), as per data published by Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce, Government of India.
India is also expected to emerge as a centre for producing compact superbikes as Indian customers progress to the next level of biking. Several global and Indian bike makers plan to utilise India's mass-production base of 16 million two-wheelers to roll out sports bikes in the 250 cc capacity.
More so, the demand for premium sports utility vehicles (SUVs) will continue to grow. The market size of premium SUVs was estimated to be around 25,000 units annually in India.