If a report by JD Power and Ernst & Young is to be believed, India is expected to become the third largest auto manufacture in the world. This information has been provided in the National Electric Mobile Mission Plan 2020. As per the report, the country's share in the global passenger car market will grow from 4 per cent in 2010-2011 to 8 per cent by 2020. The total demand for passenger vehicles in the world would go up to 108 million, of which 54 million vehicles would be demanded by the Asia, Pacific and African regions, out of which 10 million would be the demand from India before the end of 2020.
Interestingly, this spurt in growth would not be limited to passenger vehicles only. The same would also be observed in the commercial vehicle and two wheeler spaces. “In 2020 market/production for commercial vehicles, tractors and two wheelers in India is expected to reach 2.7 million, 1 million and 34 million respectively making India the third largest market with a turnover of $162 billion and the component industry attaining a turnover of $113 billion,” as mentioned in the report.
In the year 2010-2011, the auto industry contributed 22 per cent to the national GDP and 21 per cent to excise collection. During the period, passenger vehicle exports went up by 21 per cent from 2006-2007 to 2011-2012 (198452 units to 507318 units, respectively.) Commercial vehicles also grew at a CAGR of 13.34 per cent during the same period. Major challenges to the growth of India as a passenger vehicle market are road infrastructure and component supply issues. However, the component industry is also seeing growth over the years. It had a turnover of $ 40 billion during the years 2010-2011, while export of components earned $ 5 billion.