Car Market In India

Let us look at some statistics for cars in India and US

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
In the simplest of terms, the car ownership ratio between US and India is about 80:1
[This is also a measure of difference in lifestyles and the average resources consumed per human being :)]

Total cars sold in India (FY 2010): ~1.6 million
(Maruti sold highest ever number of cars(0.87 million) in India in FY 2010 while maintaining a 54% market share)

Total cars sold in China (2009): ~13.5 million
(China sees 45% growth in car industry year-on-year)

Total cars sold in US (2009): ~10.4 million
(Lowest level in 27 years; Down from 14.5 million cars in 2008)

In terms of the total number of cars, US car market has been more or less stable/saturated for the last few years.

In comparison, Japan had reached car saturation in 1990 itself !!!

Besides, did you know:

• There are more cars scrapped in US (~15 million) every year than the whole car population of India
• And there were more cars sold in China (~13.5 million) last year than the whole car population of India

Just like personal computers and mobiles, the world now has over 1 billion cars and is expected to hit the 2 billion mark for cars in a decade or two from now.

Does it mean that the car market in India like China, will follow US in car sales and car population and eventually have 20 times more annual car sales and 80 times increase in car population in a decade or two?

I believe NOT (In fact, I hope NOT)

Why NOT ?

Well, do we really need those many cars?

• One, in India it makes more sense to measure "cars per family" rather than "cars per person".
• Two, nearly 65% of India's population (~760 million people) lives in villages and small towns which are barely walking distance from start to end.

Besides, there are plethora of more reasons…

INFRASTRUCTURE
The biggest and the most immediate barrier is certainly the lack of Infrastructure. We are so stuffed that all of us cannot really move fast at the same time :)

With the state of the road infrastructure in India today and the ever increasing car density, in most cities, it has already become meaningless to commute to workplaces by cars.

SCALE
Can maruti or other companies scale out their manufacturing capacities by 10 or 50 times that fast. May be not. But in all likelihood, we will see an annual growth rate of at least 20% to 30% in the Indian car market for next decade or two.

FUEL
Perhaps, we would run out of fuel before everyone has a car. Fuel prices are on a constant rise. The Indian government bears the brunt of over Rs: 50000 crores (USD 10 billion) annually on fuel subsidy.

Can the government even think of affording 80 times this amount annually if the car population and fuel requirement go up 80 times to match the "cars ownership rate" of the US :) (Perhaps more, as this would most definitely lead to significant rise in fuel prices led by the humongous increase in demand)

(USD 800 billion or more: that's more than what it took to bail out the US economy from the 2008 housing debacle :))

AFFORDABILITY and LIFESTYLE
More than half the population still survives on less than $1 a day (can they think of affording a car, even if it is "Tata Nano" priced at just $2500) Moreover, we have more important problems to address first.

In fact, to be brutally honest: On an average, every Indian does not even have 50 sq feet of room/living space, which is what it takes to park a small car (Leave aside other basic needs)

On a lighter note, India actually has 10 times the number of motor cycles than the US :)

So you see, we have different "dynamics"!

And more than ever before, we need population control.
(India occupies 2.4% of the world's land area and supports over 17.5% of the world's population)
"ek minute artaalis bacche, kaise bitaayenge acche"

We need means of mass transportation for local commuting … such as metro, efficient bus/shuttle services and car pool efforts
(I know, I know, nearly 20 million people travel by Indian Railways every day… but that's not all local commuting; moreover, that's still not enough)

We need to improve/expand our infrastructure (Bridges, Railroads, Highways and Roads…)
We need alternate means of fuel.
We need government policies/subsidies to promote/encourage/accelerate all of the above.

[Did you know that the government in many places offers to purchase power from Solar based power plants @ Rs: 15/- to Rs: 17/- in comparison to under Rs: 6/- from coal/fuel/hydro based power plants. Now that's such a neat example!]
 
Wow… there are so many Opportunities all around us!

In fact, I am overly sure of seeing development/focus on all of the above needs over the next several years.

Err... in the midst of all this, I believe we completely forgot to think about "Global Warming" !!!