According to a report published by IHS automotive, a global research firm, India will come up as the third largest auto market in the world by the end of 2016. Backed by strong domestic sales, India is expected to come ahead of Japan, Germany and Brazil. It must be noted that the vulnerability to economic growth and lower buyers' sentiment ended up with a slowdown in the market in 2012 and 2013; however, the country is anticipated to follow a strong growth trend from 2014.
The Senior Principal Economist at IHS, Charles Chesbrough was quoted as saying, “We expect that by 2016, vehicle sales would surpass Brazil, Germany and Japan making India the third largest market. With demand for vehicles declining in most mature markets in the face of the global recession, high fuel costs and urban driving restrictions, the industry is turning its attention more strongly towards the expanding middle classes in the new powerhouse of China, India, Brazil, Russia and other growing nations.”
During 2012, China, US, Japan, Brazil and Germany were ranked the top five global auto markets, which was then followed by India at sixth position. Betting high on the Indian auto market in the long term, IHS said, “Investment reform policy will induce better environment for domestic and foreign enterprises. India light vehicle production (is) expected to reach 7 million by 2020.”
IHS further said that the growth in the demand of automobiles will not be just limited to the mass market vehicles. “The favourable Indian market conditions are acting as a catalyst for luxury and premium car makers, which are receiving impetus from new launches. The top-end car makers have posted double-digit growth for the quarter ended June 30, 2013," said the Director of IHS, James Chao.
On the other hand, in terms of production volume, the Indian auto market will be shifted to the fourth position by the end of this decade, which will place it ahead of Germany and Brazil, from its present sixth position. The officials at IHS are of a view that as the country will develop, its residents will acquire wealth, which will result in an increased demand for automobiles as the need of personal transportation will rise. On this, Chesbrough further said, “It may take a little longer in India because they do not have the infrastructure...but we know about the personal behaviour as people gain wealth, they want freedom, ability to go where they want to go and when they want to go.”