Car Market in India
Not very long ago,
the only cars that were available in India were the Ambassador and
the Premier Padmini. The Ambassador is a replica of the Morris Oxford
– an old British car, while the Premier Padmini was a Fiat 1100
assembled in India.
All that was in pre-liberalisation India, which existed before 1991,
when the first liberalization measures were announced. Earlier,
the production of the Maruti Suzuki 800 hatchback car in 1983 –
a joint venture between Government of India and Suzuki Motors of
Japan, paved the way for a renaissance in the Indian automobile
India is on every car manufacturer’s map. The reasons are
not hard to notice. Currently, India is the second largest
two-wheeler market and the fourth largest commercial vehicle
market in the world. Not only it is the eleventh largest passenger
car market globally, but it is also expected to be the seventh
largest by 2016. Post liberalization, many foreign manufacturers
have lined up and have setup base in India. Other domestic
manufacturers have also improved production levels and are
in the race for producing better models as well.
Some of the car manufacturers
who have set up base in India are Audi, BMW, Chevrolet Fiat,
Ford, Honda, Hyundai, Mahindra, Maruti, Mercedes, Mitsubishi, Skoda,
Suzuki, Tata, Toyota, Volkswagen, and Volvo. India’s economic
growth is booming currently. These manufacturers have set up manufacturing
facilities in India, or are importing cars and spares to meet the
demands of this growing market.
companies like Ford are planning to make India a regional
hub for exports of both small cars as well as engines. According
to Mr. Michael Boneham, President Designate for Ford India,
the company plans to export the small car and the engine for
markets abroad. He indicated that one of the markets would
be chiefly Ford Asia Pacific Region while other markets are
under consideration presently.
There are many reasons
for the impressive growth of the Indian car industry. Some of these
are comparatively easy availability of vehicle finance, attractive
rates of interest, and convenient installments.
Competition has forced manufacturers to be innovative and responsive
to customer demands and needs. Now that India is not alien to quality
and perfection, customer expectations have soared to higher levels.
Depending upon customers needs, four segments - small, midsize,
premium and sports utility vehicles currently represent the car
market in the country.
A niche concept cars segment is also emerging wherein reputed re-modelers
like DC Chhabria cater to individuals who wish to remodel their
vehicles to create concept cars for their use. Contrarily, a segment
is also emerging comprising of people who wish to upgrade to cars
from two wheelers. Tata already is in the process of launching the
small car Nano to suit this segment’s needs. Many other car manufacturers
such as Bajaj Auto are also following suit and are in the process
of coming up with their specific versions to cater to this segment.
Currently, there is high demand for cars across all these segments.
With the growing economy, people left with a lot of disposable income
spend it towards meeting their mobility needs such as cars. Banks
and other financial institutions have an assortment of vehicle loan
schemes with attractive rates of interest and convenient installments.
These schemes encourage people to go in for loans to purchase cars
of their choice. Additionally, a convenient union budget in the
current financial year (2008-09) has worked in favour of the automobile
sector, which has seen an uptrend in sales across various segments.
The latest trend of new cars on Indian road has led to the emergence
of an entirely new market in second hand cars too. Many entrepreneurial
and professional dealerships have sprung up in many cities in India
dealing in second hand cars.
The growth of the second hand market is not surprising. The new
car market has grown at an incredible pace in India. As mentioned,
loans are easily available in the country for purchase of new cars.
Moreover, many people are now upwardly mobile. Therefore, people
who were earlier part of the small car segment now have moved over
to the premium car segment, and those in this segment have moved
over to the luxury car segment. Therefore, the trend is to get rid
of the cars that defined them as part of the earlier segments and
buy cars that identify them with the newer segments. Apparently,
the desire for newer cars and models is yet another reason. People
get attracted by newer models, which prompt them to acquire them.
This makes them sell their current cars for reasonable resale values.
This phenomenon benefits those who want to buy cars, but are not
able to afford new ones. Many companies like Maruti Suzuki (Maruti
True Value) have also established resale showrooms where people
can purchase genuine, good condition, second hand cars at reasonable
With the emergence of favorable trends in the automobile sector
in India, what remains to be seen is how these developments will
go a long way to transform the mobility needs of the ordinary Indian.
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