New Delhi: Researcher IHS Inc. on Wednesday said it expects India’s automobile market to surpass those of Germany, Brazil and Japan to become the world’s third largest by 2016.
The company said its assumptions are based on ongoing economic development and economic recovery in India.
“The implications for auto demand are huge in India and the country has been moving along the penetration path,” it said in a statement.
China leads the world automotive market followed by the US and Japan. India, which currently is the sixth largest automobile market, will account for more than 5% of the global vehicle sales by 2016, IHS said.
India will also become the world’s fourth largest producer of automobiles by 2020, after China, US and Japan, it said.
The positive forecast comes as India’s auto sector is going through a prolonged slowdown with firms cutting production and laying off staff.
In June, car sales declined 9% for the eighth month in a row to 139,632 units, and overall auto sales declined by 5.1% to 1.41 million units. This prompted the industry lobby Society of Indian Automobile Manufacturers, or Siam, to seek a stimulus package from the Union government, a demand that had been raised during the 2008 recession as well.
“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,” said Charles Chesbrough, senior principal economist, IHS.
IHS said that history suggests all countries follow a similar vehicle development path—as economic development occurs, the need and desire for personal transportation rises. As developing countries continue their economic growth, their demand for light vehicles will rise significantly, it said.